Authored by Sara Weathers

Partner changes and ownership restructurings are common in law firms, yet insurance updates are often missed during these transitions. If coverage is not aligned with leadership changes, costly gaps may occur when claims arise.

Professional Liability Coverage Needs to Reflect Current Ownership

Lawyers’ Professional Liability policies are based on firm structure, named insureds, and ownership percentages. When partners join or leave, policies may require endorsements to ensure all attorneys are covered and prior acts coverage is maintained.

Departing Partners and Tail Coverage

When a partner retires or leaves, responsibility for future claims from past work must be addressed. Without clear arrangements, such as tail or extended reporting period coverage, both firms and former partners may face unexpected exposure.

Entity Changes Can Trigger Coverage Issues

Changes in ownership structure, firm name, or legal entity (LLC, LLP, PC) can affect policy terms. If insurers are not notified, a claim could be delayed or denied due to inaccurate policy information.

Management Liability and Employment Risks

Ownership changes can affect directors and officers (D&O) and employment practices liability coverage. Leadership transitions may increase the risk of internal disputes or employment-related claims, so it is important to review policy limits and definitions.

Don’t Let Transitions Create Risk

To minimize risk, assign responsibility for notifying insurers, securing policy endorsements, and confirming tail coverage when partners join or leave. Regularly review and update coverage to reflect current ownership, firm structure, and leadership roles.