A Tale of Two Calls – Insuring Past and Future Exposures Two calls that came in almost back-to-back really surprised me. The first came from an attorney who was retiring in another month or so. He had a few general malpractice insurance questions. The second was from an associate attorney with a small firm that was on the verge of dissolving. This associate was quite concerned about some decisions the partners were making regarding the firm’s malpractice coverage. What struck me was the attorney decisionmaker’s at both firms really didn’t understand what the terms “tail” and “prior acts” actually mean. Even if you have no plans to retire anytime soon and your firm continues to rock it, you still need to
understand what a tail is and what prior acts coverage does. I’ll explain why shortly; but first let’s start with the call from the associate. Here’s the short version of the story. Two firm partners apparently had quite the falling out. As a result, one was going to call it quits and the other was going off on his own hoping to take as many of the firm’s client’s as he could. While I have my suspicions as to why, these two partners decided to forgo the purchase of a tail policy, which would leave their two associates and the partner going off on his own without coverage for all prior acts. From a liability perspective, the decision makes no sense. The attorney who was in the process of winding down
32
