"Tail" or "discovery" coverage is built into the professional liability indemnification policy at no extra charge. This coverage protects lawyers against negligence claims that arise from legal services provided while the lawyer was still practising and covered by the policy, but it is only triggered when the lawyer leaves private practice. It is there to help whether you have become a non-practising or retired member of the Law Society, maintained your practising status but claimed an insurance or indemnity fee exemption, or ceased your membership entirely. It will also protect your estate, if a claim arises after death.
As long as you had paid the annual indemnity fee at the time the services giving rise to the error were provided (as all lawyers in private practice must), you will be eligible for coverage under the policy in effect at the time the error is discovered and reported to the Lawyers Indemnity Fund. As a result, once you leave private practice or stop paying the annual indemnity fee for any other reason, coverage remains available for past mistakes.
As noted, the terms and conditions of the policy in effect at the time the error is discovered will govern. You will want to note the following:
- The limits of coverage have increased over the years. As a result, lawyers generally enjoy either the same or higher limits than those provided in the policy issued during the year the error occurred. Since 1996, the policy has offered limits of $1 million per claim and $2 million in the yearly aggregate.
- The current policy requires any lawyer — including those who are no longer paying the indemnity fee — to report immediately to the Lawyers Indemnity Fund in writing if that lawyer becomes aware of an error or circumstances which could reasonably be expected to be the basis of a claim against them, however unmeritorious. Report a claim or potential claim
Excess insurance operates differently. If you are contemplating leaving private practice, you will want to make inquiries of your firm as to the amount of excess insurance the firm will maintain.