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Posted on: August 15, 2024 by Huntersure
Did you know that your law firm clients could still face legal claims even years after completing past work? However, lawyers professional liability insurance, specifically prior acts coverage, can safeguard law firms during transitions like mergers or dissolutions.
Lawyers prior acts coverage is a specialized component of lawyers professional liability insurance. Also known as retroactive coverage, it protects law firms from claims linked to past actions or services.
Essentially, this coverage ensures that legal clients aren’t caught off-guard by legal claims surfacing from work done years ago but made during the current insurance policy period.
However, lawyers prior acts coverage has its limitations. For instance, the incident related to a legal claim must have occurred after the policy’s retroactive date. That’s typically the date from which the firm has continuously maintained liability coverage. If the incident occurred before this retroactive date or the firm was aware of it before obtaining coverage, the claim may not be covered.
It’s important for law firms to clearly understand these limitations to avoid potential coverage gaps.
The importance of prior acts coverage cannot be overstated, particularly for law firms undergoing transitions like acquisitions, dissolutions, and mergers. With law firm mergers increasing in the first half of 2024 alone, potential liabilities may surface. These changes often involve a review of past work.
Consider a scenario where a law firm merges with another entity. The firm then gets hit with a malpractice claim related to work done by the previous firm. Without lawyers prior acts coverage, the new firm could be responsible for substantial legal fees and potential damages. With this coverage, however, the firm can mitigate these risks, ensuring past actions don’t threaten its future stability.
Assessing a law firm’s need for prior acts coverage involves thoroughly evaluating the firm’s history and exposure to potential claims. Insurance agents play a vital role in this process by helping law firms determine the appropriate coverage level for their risk exposures.
Consider various factors during this assessment, including the firm’s size, the types of legal services it provides, and its historical claims patterns.
Larger firms or those offering high-risk legal services, such as litigation or corporate law, may require more extensive coverage. Additionally, firms with a claims history or those that have undergone significant structural changes should be particularly vigilant about their coverage needs.
To protect law firms, insurance agents must tailor prior acts coverage as part of a comprehensive lawyers professional liability insurance strategy.
By ensuring the firm has adequate coverage for past acts, agents can help prevent coverage gaps that could expose the firm to unexpected liabilities. Encouraging clients to regularly review and update their coverage as their practice evolves will also protect them against claims from past actions.
Law firms operate in a high-stakes environment where the potential for liability is always present. With the right insurance strategy, including lawyers prior acts coverage, these firms can navigate their professional risks with greater confidence.
Call us today to learn more about how we can help you protect your law firm clients against prior acts claims.
Huntersure LLC is a full-service Managing General Agency that has provided insurance program administration for professional liability products to our partners across the United States since 2007. We specialize in providing insurance solutions for businesses of all sizes. Our program features can cover small firms (grossing $2.5 million annually) to large corporations (grossing $25 million annually or more). We make doing business with us easy with our breadth and depth of knowledge of E&O insurance, our proprietary underwriting system that allows for responsive quoting, binding, and policy issuance and tailored products to meet the needs of your insureds. Give us a call at (855) 585-6255 to learn more.
Posted in: Lawyer's professional liability insurance