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Left to right: Randy Evans and Shari Klevens, Dentons partnersLeft to right: Randy Evans and Shari Klevens, Dentons partners ()

A common concern of partners in a law firm is the potential that they will be held personally liable for actions taken by another partner. However, partners do not have to live in fear, as there are a number of proactive steps that can help limit the risk.

A state Supreme Court decision from Illinois demonstrates how this risk may manifest itself. In Illinois State Bar Association Mutual Insurance v. Law Office of Tuzzolino & Terpinas, 27 N.E.3d 67 (Ill. 2015), an attorney was accused of committing malpractice by, among other things, failing to inform the client that his suit had been dismissed. The attorney then completed an insurance application three months later on which he denied knowledge of “any circumstance, act, error or omission that could result in a claim.”

After a policy was issued, the attorney’s law partner learned of the claim and immediately reported it. The insurer brought suit seeking the rescission of the policy on the basis that it relied on the first partner’s material misrepresentation in issuing the policy. In response, the law partner argued that it would be “unfair and against public policy to rescind insurance coverage [for him], an innocent insured who had no knowledge of [the attorney's] misdeeds and the alleged misrepresentation.”

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