E&O: Errors & Omissions

Employed Lawyers Professional Liability

Opportunities

No practicing attorney goes without professional liability insurance, but most other attorneys do not purchase professional liability insurance. These "employed lawyers" typically work for corporations, non-profits, governmental entities and other organizations. Even though they do not "practice" they still have some professional liability exposure. And there is a specialized coverage for this exposure called "employed lawyers professional liability insurance".

Many of the duties handled by employed attorneys are duties which were or could be provided by outside law firms, but can be handled less expensively by in-house attorneys employed by the corporation. Examples of duties of corporate employed attorneys include:

Exposure

Employed attorneys have a professional liability exposure, although reduced and different from that of a practicing attorney (click here for attorneys professional liability). Most attorney professional liability claims come from unhappy clients, and employed attorneys have no clients other than their employer. However, employed attorneys, like all attorneys, face claims from third parties. And claims against attorneys from third parties are growing, with one organization estimating as much as 25% of all claims against attorneys come from third parties.

For example, a terminated employee may bring an employment claim against the corporation, and may also bring a claim against the corporate attorney claiming negligent legal work product. Or a lessee may bring a claim against an attorney working for a real estate company claiming he or she relied on the attorney's advice when negotiating the lease.

As with many professional segments, the liability of the professional may be of secondary concern. The largest exposure to employed attorneys may be from defense costs of claims with questionable merit. These types of claims are often just as difficult and expensive to defend as a clear-cut error.

Professional Liability Insurance

Employed lawyers professional liability insurance, sometimes called errors and omissions or E&O insurance, is available from a few specialty lines insurers. Coverage and pricing varies greatly depending upon the type situation, and the specific duties and work product provided.

Although forms can vary considerably, coverage is typically broad, and can even include coverage for securities, employment and regulatory work. Coverage is provided on a claims-made basis. Limits and deductibles vary with the size and type of insured. Standard limits for most small to medium sized organizations with one or a few attorneys start at $1.0 million. Significant limits are available for this class, with at least one insurer offering in-house limits to $15 million.

Some areas are harder to cover. For example, coverage for an attorney employed by a non-profit advocacy organization is not likely to get employed lawyers coverage at a low price. This exposure is typically similar to a private practicing attorney, and therefore the pricing will be similar. However, employed lawyers coverage may cover the attorney's pro-bono work if it was taken on at the direction of the employer.

Mercator Risk Services Inc. ("Mercator" or "Mercator Risk Services") provides coverage for a wide range of legal professionals including employed lawyers. Please let us know your client's needs and we will provide you with information and assistance with your particular situation or account, and professional liability coverage.

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