Many in-house counsel are already doling out plenty to insurance companies, but Renato Pontello writing in Canadian Lawyer Magazine says it may be time to purchase some more coverage. “In the last 15 years there has been an increase in the number of lawsuits brought against in-house counsel,” he says. “Their liability is being expanded as their profile within the corporation is being raised.”
Here are some of the issues legal department members may want to talk over with their insurance provider:
- Gatekeeper’s Liability: “Securities regulators view in-house counsel as gatekeepers and will take them to task if they fail to point out risks to their clients,” says Pontello. He notes that in some cases corporate counsel have been held to have made a risky business decision simply if they failed to properly explain the risk of a business strategy, instead of merely provided legal advice.
- Professional Insurance: Errors and omissions coverage only applies to claims relating to legal support, not business advice, says Pontello. “This could present problems where counsel is a member of the business team and the nature of the advice given has aspects of a commercial or corporate nature.”
- Directors and Officers Liability: Pontello says it’s “practically imperative” that in-house counsel working as directors or officers of a corporation have D&O insurance. But he still warns that in-house counsel who sit on boards are held to a higher standard of care by the courts than lay directors.
