I Want to Be a Contract Attorney. Do I Need To Purchase My Own Malpractice Insurance Policy?

Get ready for a typical lawyer response, because the answer is maybe. It all depends upon the specifics of the situation. Let’s take a look at three common variations of relationships that firms will create with contract attorneys.

1. You will be engaged full-time by one firm and held out to the general public as being associated exclusively with that firm.

Given that the definition of insured under many malpractice policies includes contract attorneys, you will usually have coverage under the malpractice policy the firm has in place as long as the firm provides notice to their carrier, and any called for premium is paid. Just be aware that if the firm refuses to or is unable to add you to their policy and then expects you to purchase your own policy, any policy you purchase will likely not provide any coverage for the work you do as a contract attorney for this firm. The reason is malpractice policies provide coverage for professional services performed for and on behalf of clients of the named insured, which is almost always a firm. This is why you really do need to be added to the firm’s policy. One final thought here. While trust is a good thing, when it comes to coverage, it might be worth having the firm provide documentation that you have been added to their policy.

2. You will be temporarily engaged by one or more firms but never held out to the general public as being associated with any firm.

As stated above, coverage may be available under the malpractice policy the firm or firms have in place if the firm or firms provide notice to their carriers and take care of any premium due. If any firm is unable or unwilling to add you to their policy, you could look at purchasing your own policy. If this firm ends up suing you for malpractice, coverage should be in play under your policy because this firm would be a client of yours. Of course, this outcome depends upon your ability to provide adequate documentation that this firm was an actual client of your own practice. Think formal engagement agreement that documents you are in the role of an attorney providing legal services to another firm.

That said, the interesting question becomes: Is coverage really necessary in this situation? While the decision is one only you can make, consider this: Assuming you have no client contact of any kind with any client of the firm or firms, all clients of the firm or firms are never made aware of your involvement on any matter, and the firm or firms accept full accountability and responsibly for your work product (all of which are commonplace in this type of business relationship), the risk of having to deal with a malpractice claim is going to be extremely low.

3. You will be engaged part-time by one firm and held out to the general public as being associated with that firm while also establishing or running your own practice.

In this situation, you will be working for two firms, the firm you contract with and your own solo practice. Again, remember that malpractice policies only provide coverage for work you do for and on behalf of clients of the named insured, which is almost always a firm. This means if you wish to be covered for all of the work you will be doing, you will need to be on two separate policies. One will be the policy of the firm you are contracting with and the other will be the policy you purchase to cover the work you will do for and on behalf of clients of your own practice.

However, problems can arise should the firm you wish to contract with refuse to or be unable to add you to their policy. Fortunately, there is a workaround. Instead of working under contract with the firm, explore the possibility of working with this firm as co-counsel on matters the firm wishes to have you involved with.  Of course, in accordance with the Rules of Professional Conduct, all common clients would need to be made aware in writing of the terms of the fee split and that they will be retaining two discrete firms. I would encourage you to also go one step further and document the roles and responsibilities of the involved attorneys. One side note here: Do not consider exploring this workaround option if either you or the firm is uninsured or underinsured. When you create co-counsel relationships, you are in essence creating a partnership for every joint matter you work on, which means liability for each other’s missteps can come into play.

In sum, contract attorneys are often added to the policies of the firms they are contracting with. It’s only when you have clients of your own that you need to look into obtaining your own coverage. And while I haven’t explored every possible spin on contract attorney relationships with this post, remembering that malpractice policies provide coverage for work done for and on behalf of clients of the named insured will help you work the question of whether or not you need your own policy.