Don’t Get Hammered by Your Attorney Malpractice Hammer Clause

Your agent told you that you don’t want to have a clause in your policy called “The Hammer Clause.” No, it’s not a Pro-Wrestling move and no, you won’t find the term anywhere in your policy. The Hammer Clause is a term of art for forcing a settlement in the Defense, Indemnification, and Cooperation section of your policy. And you need to understand it. It could mean your career.

Why the “License Rental” Business Model is Problematic

Solo lawyers continue to occasionally call in wanting to discuss a business opportunity that has come to be known as the “license rental” model. In short, these lawyers are being offered an opportunity to affiliate with an out-of-state firm or occasionally a non-lawyer owed company and it’s often presented as an attractive way to develop a stable flow of recurring business. The out-of-state firm or non-lawyer owned company is wanting to direct cases to the lawyers they are contacting as a way to offer legal services in the jurisdictions in which these lawyers practice. The actual work may occur under an of counsel or contract attorney relationship and participating lawyers will receive some portion of the fee coupled with an understanding that the required amount of work will be minimal. Targeted practice areas include but are not limited to debt settlement, mortgage foreclosures, estate planning, traffic violations, and criminal expungements.

Those who take the time to call me are usually wanting to make sure that, if they sign on to something like this, their malpractice coverage will be in play should a misstep ever occur. Before I answer that question, however, I always start by asking if they have given any thought to whether signing on is ethically permissible because many times the opportunity under consideration often won’t ethically pass muster for a number of reasons. Read on….

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