< Back
Coverage Question Series – Part 42
Post on February 15th, 2019
This is a continuing series in which we address policy coverage questions that we routinely discuss with you and your colleagues. The answers provided are based on the basic policy form, currently LPLP-1s (effective for all policies new or renewed as of May 1, 2018). Refer to your specific policy and any endorsements attached thereto that may change coverage or the answers provided here.

I discovered my partner has been lying to his client about work he supposedly was doing, am I covered?

Yes, if certain requirements are met by the innocent party. Out of the blue, you receive a call from one of your partner’s clients asking about the status of their case and inquiring about how a recent court hearing went. You discover that the case was closed last year and that the court granted judgment to the other party. No appeal or any further action appears to have been taken. When confronted with the issue, the partner comes clean about their drinking problem and the tale they spun in order to avoid a difficult conversation with the client.
Exclusions (a) and (b) state that the policy form does not apply to “any criminal, dishonest or fraudulent act, or failure to act,” or for “any willful, intentional or malicious act, or failure to act.” However, OBLIC waives these exclusions for other Insureds under the policy if they “did not personally participate or personally acquiesce or remain passive after having personal knowledge thereof.” II. INNOCENT INSUREDS. The attorney who has lied to his clients is still out of coverage, but the innocent attorney, who had no idea what was going on and reported it as soon as become aware, would have coverage under the policy, subject to the other terms, conditions, exclusions, and endorsements of the policy.
One additional point to note is that, if the lying attorney also stole the client’s funds, II. INNOCENT INSUREDS limits coverage for theft of client funds up to a maximum of limit of liability of $50,000. A Business Owner’s Policy with a Call Tammy, Danna, or Rick at 614-572-0616 to discuss the risks the Business Owner’s Policy can cover.
Practice Pro-tip. If you suspect that a partner, or any other attorney in the firm, is suffering from depression or substance abuse issues, call OLAP. Ignoring the issue, or trying to rationalize the behavior, never ends well for you, the suffering attorney, or your clients. Get them the help they need, review their case files, and make sure the clients aren’t harmed. You should also call us, as we can certainly help. We are in the business of providing the protection you deserve.
As you should expect, these Q&A scenarios are based on simple hypotheticals. Coverage determinations for an actual claim are ultimately based on the unique facts, applicable law, and the Terms, Conditions, Limitations, Exclusions, and Endorsements of your policy.
Please contact me at [email protected] if you have any questions!
Carl Marsh, Esq.
Claims Counsel