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Article: May 22, 2017  |  ArticlesMalpractice Alerts

Another practice challenge is presented by a request to serve as outside counsel. For example, you are contacted by a new client, a bank or sizable business, and they send you a long and detailed agreement that defines every aspect of your representation, from your hourly rates and staffing, to limiting your firm’s  recourse.

The mega-law firms have general counsel whose job it is to review and negotiate these agreements. As a solo or small firm that simply does not have the resources to hire a full time person to review these extensive agreements, you must at least watch for a couple clauses.

*  Keep an eye out for agreements and obligations that either limit the insurer’s right of subrogation or expand the liability of the insured;

*  Agreements to indemnify the client, regardless of negligence, for acts arising out of the representation are becoming increasingly common.

(See Sephora USA, Inc. v. Palmer, Reifler &Associates, PA) Nearly all LPL policies exclude coverage for agreements and obligations entered into by the insured without the consent of the insurer.

Before committing to obligations imposed by a new, and hopefully lucrative, client, review the agreements in detail. Contact your insurer if an indemnification clause or other similar expansion or reduction of duties is present. After all, it is  not in your or your client’s interest to lose your insurance coverage when it may be avoidable at the outset of the representation.

Editor’s Note: Thanks to OBLIC Claims Counsel Carl Marsh for this article on Outside Counsel Agreements.

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