If a lawyer leaves a law firm, the firm may continue to cover them as a former lawyer even after they left. If the firm goes under in the future, the lawyer may lose the coverage. The lawyers prior acts coverage functions as a professional liability insurance program for lawyers, groups of lawyers, and dissolving law firms.
Understanding Lawyers Prior Acts Coverage
Under this coverage, the policy covers lawyers for errors, omissions, or acts that occurred before their insurance policy’s launch.
Financial experts with backgrounds in law and claims handling are underwriters fort the prior acts coverage. These individuals have skill sets that allow them to understand a client’s claim history. They are uniquely able to guide the client through the claims process.
Avoiding Financial Risk
The policy coverage provides financial protection for lawyers and law firms. For example, if a lawyer or group of lawyers held an important role in a former law firm, their leaving could present financial issues for the former firm. Under this scenario, the prior acts coverage provides more coverage if a former firm fails.
Additionally, when a law firm is about to dissolve, prior acts coverage comes into play most directly. If the firm must write a tail policy, a failing firm has no alternative insurance policy that will provide coverage. Prior acts coverage accepts liability for those risks as direct coverage.
As professionals and professional entities, lawyers and law firms must consider professional liability insurance programs. The right coverage will save financial conflict in the future.