Does your insurance policy cover contract lawyers?

This issue has arisen in a number of conversations with clients.

Why would you engage a contract lawyer?  For one of several reasons: (i) even out the work flow; ii) engage expertise you don’t possess at the moment; (iii)  gain time to observe the quality of work of a potential hire; and (iv) determine if you have enough work in the long term to hire a permanent employee.

Once you hire a contract lawyer, whether for a designated number of hours or a specific project, do you know whether that lawyer is covered under your errors and omissions insurance policy? Often, policies are written to include all the attorneys you hire after your policy commencement date up to the end of that policy term period. Then, your premium is based for the following year on the higher number of lawyers now on staff.

But, the question remains, are you covered for what is, in essence, a part-time employee. Check with your broker; read your policy. Make sure you know the answer. Many lawyers require that their contract lawyers specifically name them on their policies with an endorsement. Of course, remember that most policies are claims-made policies, not occurrence policies. So, your policy must be written in such a way as to cover negligence asserted in the current period though the alleged negligence was committed by your contract lawyer in an earlier period and is no longer present. Ask. Be sure.

Categorized in: Cash Flow - Finances, Management