Page 48 - Investment Advisor December 2022/January 2023
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WEALTH & RISK

                 By Steven F. Goldman




                 Time to Boost Protection for In-House Lawyers?


                 Advisors can help identify gaps in their risk management strategies.


                        ttorneys make up a sizable
                        share of many advisors’ val-
                 A ued, long-term client bases, and
                 the fastest growing segment — attor-
                 neys working in-house at companies —
                 now numbers well over 100,000. This
                 growth continued in 2022, according to
                 the Association of Corporate Counsel’s
                 (ACC) 2022 Chief Legal Officers Survey,
                 as 45% of respondents expected to hire
                 more attorneys this year, up 13 points
                 from 2021. This presents an opportunity
                 for advisors to identify potential gaps in   The third area encompasses moon-  produce six- or even seven-figure losses,
                 their risk management strategies.   lighting  or  other  engagements  outside   which could deliver a devastating hit to
                                                   their company work. In these cases, the   an attorney’s personal wealth.
                 POTENTIAL RISKS                   attorney is not acting as a sole proprietor,   The good news is that there is a spe-
                 Company attorneys  face the  threat of   but  may  be assisting  a friend  or  family   cific type of coverage available and in
                 lawsuits on three main fronts. The first   member with a personal legal matter or   many cases the company purchases it
                 relates to the legal work they provide to   possibly providing advice or support as a   for their legal department. It’s called
                 their employer, which may involve areas   member of a not-for-profit organization.   employed lawyers professional liabil-
                 such as contract negotiation, merger and   As an example, an in-house transac-  ity and it features broad definitions of
                 acquisition due diligence, intellectual   tional attorney for a financial institution   “insured” (employed lawyers, their legal
                 property, and employment and labor law,   defended an indigent client in a felony   support staff, independent contractor
                 any of which can result in allegations   assault matter under a state bar associa-  attorney, temp attorney, and notaries),
                 from third parties for legal malpractice.   tion’s suggested pro bono legal services   “professional services”, “claim” and
                 More and more, these duties are extend-  guideline. After the client was convicted,   “loss” to encompass a wide range of
                 ing to compliance efforts, such as priva-  he sued the attorney for malpractice,   scenarios related to their in-house legal
                 cy issues, and involve interactions with   alleging ineffective assistance of counsel.  work, personal interactions and pro
                 third-party  regulatory  bodies,  such  as   While in-house attorneys may believe   bono or moonlighting endeavors.
                 the Securities & Exchange Commission.   that their work is covered by the com-  It’s  well  worth  it  for  in-house  attor-
                   The  second  source  of  risk  comes  into   pany’s directors  and  officers  liability   neys, including those working in advisor
                 play when well-meaning in-house attor-  policy, the unfortunate reality is that it   firms, to check whether their company
                 neys provide what could be considered   may only apply to very select executives.   has this coverage. If not, it’s best to con-
                 personal legal services for company   Further, it may not provide coverage for   tact an insurance agent to see if there’s
                 employees or executives. These are typi-  the performance of  legal services, and   a way it can be purchased. While your
                 cally informal, such as a lunchtime conver-  it generally does not extend to claims   in-house attorney wealth management
                 sation where an employee might ask for an   arising out of personal legal services,   clients may not expect this type of insur-
                 opinion on a matter, such as a home sale   moonlighting, or pro bono legal services.  ance recommendation from you, it may
                 transaction. Similarly, an executive might   In addition, the attorney’s personal   prove to be a value-added service that
                 ask an in-house attorney for thoughts or   umbrella liability policy typically does   could further cement a trusted relation-
                 even help on areas ranging from a traf-  not extend coverage related to the pro-  ship with them for the long term.
                 fic violation to establishing a trust to a   vision of legal services. This results in
                 divorce. Engaging in those conversations   a  significant  gap  that  could  expose  in-  Steven F. Goldman is Division President,
                 and offering advice or support could open   house attorneys to a substantial loss. It’s   North America Financial Lines at Chubb.   Adobe Stock
                 them up to a lawsuit for negligence.   not unusual for these types of lawsuits to   Reach him at [email protected].



              46 INVESTMENT ADVISOR DECEMBER 2022/JANUARY 2023 | ThinkAdvisor.com
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