March 8, 2022

Malpractice Insurance: Do In-House Lawyers Need It?

Law firm lawyers wouldn’t dream of practicing law without having a malpractice policy in place, but those policies are far from ubiquitous among in-house lawyers.  This Woodruff Sawyer blog takes a look at whether in-house lawyers should consider malpractice insurance.  The blog says that the good news is that if you’re worried about your employer suing you, that’s unlikely. (Of course, getting fired is a whole other kettle of fish).  However, this excerpt says that there still may be some situations in which “employed lawyers insurance” may make sense:

So, when is employed lawyers insurance useful? Here are a few scenarios:

Someone Other Than the Employer Perceives an Attorney-Client Relationship with You. Say, for example, during your day-to-day dealings with other employees, someone casually asks a question about whether he should exercise his options, or about a speeding ticket or an apartment eviction. If this person now perceives that you are his lawyer because of that exchange, it’s possible that he could sue you for malpractice.

Employed lawyers insurance gives an extra layer of protection here, but it’s certainly better to avoid casually giving advice to folks who are not your clients. Your best practice is to be deliberate about refraining from giving legal advice to those with whom you do not want to have an attorney-client relationship.

If you’re in a work environment where, as a cultural matter, you feel obligated to answer these types of questions, employed lawyers insurance is something you might consider. The same is true if part of your job is to give advice to third parties that are not technically the same as your employer, for example the charitable trust “arm” of your employer.

You Are Moonlighting. Employers sometimes encourage their employees to moonlight on a pro bono basis. Employed lawyers insurance responds if you are sued for malpractice as a result of these activities. The insurance will also typically provide your defense costs should you find yourself the subject of a hearing in front of the California Bar.

You Are Concerned That Your Employer Won’t Indemnify You. You may work for an employer whom you perceive will not defend you if a third party (a vendor or customer, for example) decides to sue you for legal malpractice for whatever reason, or you are worried that your company might be insolvent (and thus can’t indemnify you) at the time of the suit.

The blog reviews how these policies work and their typical exclusions, and also addresses alternatives, including personal indemnification agreements and, in some cases, D&O insurance.

John Jenkins