You spent the last five years working hard at a firm to establish a client base and a good reputation in the legal community when you accepted an opportunity to join a friend’s firm which held more promise for an early partnership. After accepting the position and working for one year, you receive a demand letter from a client at your former firm which accuses you of malpractice. You immediately report this claim to your current carrier only to discover that the claim is not covered by your new firm’s malpractice policy.
Why Isn’t There Coverage for Your Claim?
This is a scenario which happens all too frequently when attorneys change firms and the new firm has a limitation on the Prior Acts Coverage in their policy. The vast majority of malpractice policies limit coverage for prior acts to the date you began working for your current firm. In other words, any legal services provided to clients of your former firm are not covered. To compound this issue, most carriers do not allow you, as an individual attorney, to purchase an extension on your ability to report claims after you leave a firm, this is also known as “tail coverage”.
Full Career Coverage
The Bar Plan’s policy differs from many malpractice policies by providing substantially more protection. The Bar Plan offers full career coverage, regardless of how many times you change firms, as long as there has been no gap in your malpractice coverage. The Bar Plan also allows our insureds to purchase individual tail coverage so that they can protect themselves from claims that may be reported after they leave a firm, which is important if their new firm’s policy limits prior acts coverage.
How to Determine if the Policy Limits Prior Acts Coverage
Trying to understand if a policy offers full prior acts coverage – “career coverage”, or limits coverage to the date you first joined your current firm can be tricky. Many carriers and agents will say that their policy offers full prior acts coverage because there is no restriction stating that coverage begins on a certain date (this is known as a “retro-date” in the insurance industry). However, by carefully reading the policy, generally in the Coverage section, you can determine whether it is Career Coverage or Limited prior acts coverage. A common way policies limit prior acts coverage is to use these words, “on behalf of the policyholder (or Named Insured)” when describing the legal work that will be covered. This is triggering language which means that the coverage is limited to legal services performed for the current firm, and no other firm.
Learn more about the many ways in which The Bar Plan protects our policyholders: http://www.thebarplan.com/wearedifferent
