Hiring a Contract Lawyer? What If They Commit Malpractice?

07/12/2013
Published in Solo Practice University July 12, 2013

Many firms, both large and small, use temporary contract lawyers to even out workflow, gain access to specific skills, or add temporary capacity to handle matters. The lawyer who engages the contract "pinch hitter" becomes responsible – including in a malpractice sense – for any errors committed even in a seemingly simple case. And the reverse may also be true, where the attorney making the special appearance becomes liable for the errors of the primary lawyer or even of other lawyers who made previous special appearances.

This makes it crucial that, once a contract lawyer arrangement is established, whether for a designated number of hours or a specific project, both sides of the arrangement should make sure the each lawyer is covered under an errors and omissions insurance policy. Often, policies are written to include all the attorneys you hire after your policy commencement date up to the end of that policy term period. Then, your premium is based for the following year on the higher number of lawyers now on staff.

But, the question remains, are you covered for what is, in essence, a part-time employee? Check with your broker; read your policy. Make sure you know the answer. Many lawyers require that their contract lawyers specifically name them on their policies with an endorsement. Remember too that most policies are claims-made policies, not occurrence policies. So, your policy must be written in such a way as to cover negligence asserted in the current period though the alleged negligence was committed by your contract lawyer in an earlier period and is no longer present.

The consequences of failing to make sure about these matters can be severe. For example, several years ago the Florida Supreme Court, in

Cowan Liebowitz & Latman, P.C., et al. v. Donald Kaplan, ruled that legal malpractice can be alleged against an attorney or law firm by a third party who had not retained the lawyer's or law firm's services. A third party who relied on the lawyer's professional services – even if rendered on behalf of another – can sue if the lawyer failed to exercise due diligence and proper care and thereby damaged the third party. The court decision permitted creditors of an insolvent corporation to sue the lawyers who represented the corporation, accusing them of failing to disclose material information in private placement memoranda for the sale of shares.

Consider the complexities that can arise in similar situations, and make sure of contract lawyer malpractice coverage before a problem begins.

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