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Leaving a Firm? What Happens to Your Individual LPL Coverage

Shutterstock_339533942When a lawyer leaves a firm, he has more to think about than how long his new commute will be and what his new office will be like – more importantly, he needs to think about his lawyers professional liability (LPL) coverage, and whether or not it will follow him to his new place of employment.

If the law firm remains an ongoing entity after the lawyer leaves, he is usually covered as a former member or employee of the firm for claims arising from services rendered while he was with the firm, assuming the firm retains its coverage.

Extended Claims Reporting Period Coverage

However, if the firm divides or dissolves at some point thereafter and does not buy Extended Claims Reporting Period Coverage (ECRP) or “tail” coverage for the term upon its termination, then there may be no coverage for the lawyer for any claim made after that. ECRP is not typically made available to an attorney or law firm as a standalone product; it is only available in combination with a previously issued claims-made policy.

In most instances, his new firm’s insurance policy will cover only the lawyer’s acts on behalf of the new firm, leaving a potential gap. Most carriers won’t provide coverage for claims arising from the acts or omissions of the lawyer prior to joining their client’s firm, even if the new firm wishes to do so. USI Affinity offers prior acts coverage available for lawyers joining a firm during the policy period (a new lawyer application and underwriting approval are required).

Going Solo?

A lawyer leaving a firm to go into solo practice may be able to purchase his own prior acts coverage in connection with a policy issued to cover his solo activities, and there may be an option under his former firm’s policy to purchase an individual ECRP. A “part-time” policy might also be an option for lawyers who are doing a limited amount of work.

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