Hiring a Contract Lawyer? What If They Commit Malpractice?

Many firms, both large and small, use temporary contract lawyers to even out workflow, gain access to specific skills, or add temporary capacity to handle matters. The lawyer who engages the contract “pinch hitter” becomes responsible – including in a malpractice sense – for any errors committed even in a seemingly simple case. And the reverse may also be true, where the attorney making the special appearance becomes liable for the errors of the primary lawyer or even of other lawyers who made previous special appearances.

This makes it crucial that, once a contract lawyer arrangement is established, whether for a designated number of hours or a specific project, both sides of the arrangement should make sure the each lawyer is covered under an errors and omissions insurance policy. Often, policies are written to include all the attorneys you hire after your policy commencement date up to the end of that policy term period. Then, your premium is based for the following year on the higher number of lawyers now on staff.

But, the question remains, are you covered for what is, in essence, a part-time employee? Check with your broker; read your policy. Make sure you know the answer. Many lawyers require that their contract lawyers specifically name them on their policies with an endorsement. Remember too that most policies are claims-made policies, not occurrence policies. So, your policy must be written in such a way as to cover negligence asserted in the current period though the alleged negligence was committed by your contract lawyer in an earlier period and is no longer present.

The consequences of failing to make sure about these matters can be severe. For example, several years ago the Florida Supreme Court, in
Cowan Liebowitz & Latman, P.C., et al. v. Donald Kaplan, ruled that legal malpractice can be alleged against an attorney or law firm by a third party who had not retained the lawyer’s or law firm’s services. A third party who relied on the lawyer’s professional services – even if rendered on behalf of another – can sue if the lawyer failed to exercise due diligence and proper care and thereby damaged the third party. The court decision permitted creditors of an insolvent corporation to sue the lawyers who represented the corporation, accusing them of failing to disclose material information in private placement memoranda for the sale of shares.

Consider the complexities that can arise in similar situations, and make sure of contract lawyer malpractice coverage before a problem begins.

If you’ve worked with contract lawyers, how have you handled or currently handled?  Please share.

All opinions, advice, and experiences of guest bloggers/columnists are those of the author and do not necessarily reflect the opinions, practices or experiences of Solo Practice University®.

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5 comments on “Hiring a Contract Lawyer? What If They Commit Malpractice?

  • Great points! I have done a lot of freelance work for several years. The best bet for a firm is to hire an attorney with his or her own malpractice insurance in addition to the hiring attorney having the same.

    There are some best practices one can use to avoid malpractice liability and to ensure great work product. These include giving meaningful review of the freelance attorney’s work product, generally supervising, giving clear guidance, and giving the attorney sufficient time to complete the assignment. A lot of freelance or contract attorneys tends to be young or inexperienced attorneys so some supervision is important. Further, rushed deadlines are this freelance attorney’s worse nightmare! Also, if the hiring attorney is uncertain about the subject matter, or the procedure at hand, they really should become familiar with it.

  • Very interesting topic. I passed the article on to a friend of mine who used to do insurance defense and now is in private practice. His comments were that you need to make sure you read your malpractice policy and understand it. It would also be a good idea to check and see if the contract lawyer also has malpractice insurance. This is especially true if you are hiring younger lawyers. One thing that was not mentioned and that is what if a contract lawyers commits an ethical violation, can you be held responsible. You need to check with you Bar Association. You also need to pay. close attention to what the contract lawyer is doing and how he is doing it. This is especially true if you do not have previous experience with the contract lawyer.

    • I have done freelance work for other attorneys since I started practicing 28 years ago. I have always carried malpractice insurance. I don’t remember any attorneys I’ve worked for asking whether I had malpractice insurance. I know at least one of the attorneys I worked for didn’t have malpractice insurance, but I knew him for a long time and trusted him.

  • If the contract lawyer commits negligence, depending on the circumstances, the engaging lawyer will be responsible. This is analogous to an employment situation. Sometimes, if the engaging lawyer commits negligence on the case being worked, the contract lawyer may also be swept in and be held responsible. To have protection all around, each should have E & O coverage. Another caution: If you, as contract lawyer, have a policy, it may not cover work done for another lawyer! Most such policies cover your work for clients; but working on another lawyer’s client’s matter often is not covered! READ YOUR POLICY. Call your carrier and make sure you have the coverage you want.

  • Most – but not all – LPL policies automatically cover contract attorneys for the work they do on behalf of the firm. Interestingly, in reading the attached article I see that it says, in part, “Many lawyers require that their contract lawyers specifically name them on their policies with an endorsement.” This is a frequent misconception. If the contract attorney falls within the definition of an “Insured” under the firm’s policy – again, as is the case with most policies – then the contract attorney’s own LPL policy is not relevant. The firm’s policy will respond, and the “Insured v. Insured” exclusion will effectively prevent any attempt by the firm to recover under the contract attorney’s own policy. As always, the key is to read your policy before entering into such a relationship, since regardless of how you may word any contract, the policy will respond as the policy is written.

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