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Why In-House Counsel Should Consider Malpractice Insurance

By Casey C. Sullivan, Esq. on November 13, 2015 2:57 PM

One of the benefits of working as in-house counsel is that you don't have to worry about pesky (and somewhat costly) things like malpractice insurance, right? If something goes wrong, no one will blame the company lawyer. Except, of course, when they do.

Civil lawsuits and even criminal indictments targeting in-house attorneys aren't the norm, but they are becoming increasingly common, leading more and more in-house lawyers to look into malpractice insurance.

Increasingly Common Risks to In-House Counsel

Once upon a time, going after the company's lawyer was rare, almost unheard of. But those days are over. No one knows that better than Lauren Stevens, former vice president and associate GC at GlaxoSmithKline. Stevens was indicted not once, but twice, for the work she did at the pharmaceutical company -- allegedly, that work involved obstructing an FDA inquiry and falsifying documents.

Stevens got off -- she was acquitted in 2013 by a federal judge wrote that she "never should have been prosecuted" -- but the risk of in-house counsel becoming a target hasn't disappeared. The lawyers at General Motors, for example, quickly came under intense scrutiny after the automaker's faulty ignition switches left 124 dead. (The scrutiny highlighted many of their failures, but it has yet to result in prosecution or litigation.) There's even some indication that GC's could be at risk of getting sued by an unhappy client -- the company. And you thought getting fired would be bad.

Gimme the Standard CYA Policy

Luckily, you don't need to reinvent the wheel when you're looking for insurance coverage as an in-house attorney. These days, liability insurance comes in a variety of different types, coverage plans, and fancy names -- details too numerous to name here. Many policies exist that are specifically tailored to in-house counsel. As a bonus, since risks are lower for in-house attorneys, your malpractice insurance will often have lower rates and deductibles.

Still, there are a few things to look into when considering malpractice coverage. John Tanner, an attorney and current Executive Vice President with the insurance company McGriff, Seibels & Williams, recommends looking at four factors. First, you should consider your liability exposure. If your legal department is frequently involved in corporate and legal controversy, more coverage may be better. You'll also want to consider the company's indemnification and hold harmless protection, if any. That will require you to take into account the risks of corporate insolvency, as that may leave your employer unable to finance your defense. Finally, you'll want to consider the company's existing insurance policies and the extent to which you're covered under them.

It's a lot of work, but nothing beats peace of mind -- and having someone else there to cover your defense.

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