The simple beauty of a claims-made policy -- captured in
its title, description and coverage provided -- conceals an
equally simple, but not at all beautiful, danger. This is because,
as noted by the Supreme Judicial Court, "[t]he purpose of a
claims-made policy is to minimize the time between the insured
event [the claim asserting the alleged negligent act or omission]
and the payment [by the insurer]."1
Accordingly, coverage exists under a claims-made policy if, but
only if, the claim against the insured is first made during the
policy period. Depending upon the particular policy, there may also
be an additional requirement that the allegedly negligent act,
error or omission giving rise to the claim occurred after the
retroactive date stated in the policy. That aspect and its various
ramifications are matters that, perhaps, can be explored in another
Today's exploration is limited to the fact that, as simply and
honestly stated, the coverage provided in a claims-made policy ends
when the policy ends. Most attorneys at least implicitly
acknowledge that reality by ensuring that, as one policy expires,
it is succeeded by a renewal or successor policy. This guarantees,
at least for the period of the successor policy, continuing
But as Mark Twain once said, "It ain't what you don't know that
gets you into trouble. It's what you know for sure that just ain't
so." What is frequently overlooked by attorneys is the potentially
pernicious effect brought about by the sometimes quite substantial
interlude between the commission, or alleged commission, of a
negligent act and the eventual first assertion of the claim
stemming from that commission. The tail, an attorney's potential
exposure to a claim, whether justified or not, can continue for an
indeterminate period of time after the alleged action giving rise
to the claim.2
The applicable statute of limitations for malpractice actions
against attorneys is "three years next after the cause of action
accrues."3 However, the action does not accrue until the
misrepresentation or error is discovered or reasonably should have
been discovered by the claimant.4
Additionally, limitations periods are tolled by a claimant's
minority or incapacity caused by mental illness,5 or by
an allegation that the defendant fraudulently concealed the cause
of action from the knowledge of the clamant.6
Specifically as to attorneys, the limitations period for commencing
suit can be tolled by the doctrine of continuing representation.
Because a client has a right to place confidence in his attorney's
ability and good faith, he consequently does not have to be
concerned with the accrual of a cause of action against the
attorney until the attorney's employment as attorney is
Nor does "that sleep of death" contemplated by Hamlet deliver
surcease. A legal malpractice cause of action survives an
attorney's death,8 permitting suit to be filed against
the estate of a deceased attorney. Should it be the potential
claimant who dies, his executor or administrator is entitled to
file an action against the attorney "at any time within the period
within which the deceased might have brought the action or within
two years after his giving bond for the discharge of his trust …
That statute further states, ominously, that an action "may be
commenced by the executor or administrator within three years from
the date when the executor or administrator [not the decedent on
whose behalf he makes the malpractice claim] knew, or in the
exercise of reasonable diligence, should have known of the factual
basis for a cause of action."10
The simple point, and the simple danger, of all this is that the
risk of a claim being asserted - and the attendant necessity of
incurring what could be substantial defense fees in repelling the
claim - can and will continue long after a claims-made policy comes
to an end. Attorneys, who by nature, custom, tradition and their
own practice, exert considerable effort and caution to protect
their clients, should exercise the same caution and prudence in
their own behalf.
However, many automatically, perhaps wishfully, assume that
retirement, bringing their practice to an end, transferring to a
new legal practice in association, or even disability or death,
means that they can also safely dispense with insurance protection.
Proceeding on that assumption is short-sighted and economically
perilous. It deprives them of both indemnity and defense (sometimes
more colorfully described as "litigation insurance")11
coverages for claims that are subsequently made during and in the
vacuum they have carelessly created.
This danger also confronts attorneys who, anticipating going into
practice with a different set of attorneys or law firm, liquidate
or dissolve their current law practices. Although the legal
enterprises or law firm they join may indeed have its own
professional liability policy, such policies customarily only
provide coverage for claims made with respect to actions, conduct
or omissions allegedly committed in the service of the legal
enterprise or law firm, the named insured. They do not extend
coverage for claims arising from acts or conduct occurring prior to
the attorney's signing on with the new group of attorneys or law
Some insurers will provide, if requested by the named insured,
so-called "prior acts" coverage. Such policies are relatively rare,
and the willingness of law firms to request such coverage,
necessitating an additional premium payment for exposures for which
they cannot be held responsible, even rarer.
Most professional liability policies contain provisions which
enable an attorney to obtain coverage for this tail exposure. The
basic underlying purpose of the provisions is to permit the
attorney to purchase coverage that will protect him from claims
made against him, subsequent to the ending of the policy, for acts
or conduct that occurred prior to the ending of the policy.
Generally, such provisions provide "extended reporting period"
coverage. They do not create or set up a new policy. Rather, they
will treat a claim first made during the extended reporting period
as having been made during the now ended period of the
Specific extended reporting period provisions vary, depending upon
the policy. Here the admonition that appears on the first page of
virtually all claims-made policies, that the insured should "review
this policy carefully," becomes most important and definitely
should not be ignored.
Extended reporting period tail coverage can be purchased for a
limited period of time, or indefinitely, for an unlimited period,
the number of years selected by the attorney determining the amount
of the premium charge.
In terms of value and peace of mind, the unlimited period of
coverage should be purchased, even though the premium charged for
the unlimited extended reporting period may be as much as 225
percent of the premium charge for the
That may seem like a large sum, but since the protection being
purchased is perpetual, since an extended reporting period for only
one year after the policy has come to an end customarily costs 100
percent of the premium of the expiring policy, and since defense
litigation costs incurred in resisting malpractice claims continue
to ascend, the advantages of purchasing the unlimited extended
reporting period are many.
The decision to purchase the extended reporting period coverage
usually must be made within 60 days after the expiration of the
policy, and payment of the required premium, in full, is necessary.
Generally speaking, most policies state that the limits of
liability for the extended reporting period chosen will be the full
limits of the policy pursuant to which the extended reporting
period is purchased.
The attorney must be aware, however, that these limits will not be
replenished or reinstated with each new year of the extended
reporting period. Rather, the limits, whatever they are, are for
the entirety of the extended reporting period and will be reduced
by any defense or indemnity payment that the insurer makes.
Some few policies - among them the Lawyers Professional Liability
Policy issued through the MBA Insurance Agency under the Lawyers
Professional Liability Claims Made Insurance Program sponsored and
provided by the Massachusetts Bar Association to its members -
permit, in certain circumstances, extended reporting period
coverage, at no premium charge, for an insured attorney who, for
whatever reason, including death or disability, ceases the practice
of law during the policy period.
Also, in a few policies (again, the Lawyers Professional Liability
Policy issued through the MBA Insurance Agency is one of these) an
attorney, other than a sole proprietor, who is insured under the
policy covering the law firm, association or group of attorneys
with which he is employed, is entitled to purchase an "individual
tail policy" upon leaving, for whatever reason. This is an actual
policy, issued only to the departing attorney, which will cover him
for claims that might be made against him for acts or conduct in
which he engaged while employed by the entity from which he is
leaving. The attorney must pay a premium to obtain this individual
There is no obligation on the individual attorney to purchase this
individual tail policy. There may well be no need for him to
purchase it, if the firm from which he is leaving is one which he
believes is likely to continue in existence far into the future and
which, during that future existence, will continue to purchase
liability insurance coverage. Even though he has left the firm,
that individual attorney will still qualify as an insured under
that firm's policy for any claim that might be made against him for
acts or services he rendered while employed by the firm.
However, if the attorney has any concern about the longevity of
the firm from which he is departing, or about that firm's
likelihood or intention to continue purchasing professional
liability coverage in the ensuing years, he has the option to
purchase the individual tail policy.
An attorney's current policy may not have, or may not have
favorable, extended reporting period or individual tail policy
provisions. If that is the case, individual standalone policies are
available, primarily in the surplus lines market, which will
provide coverage in the same general manner for an attorney's tail
exposure. The premium charged for such policies is usually
Very careful attention must be directed to the proposed policy's
insuring agreement, definitions, exclusions, conditions and policy
period sections, especially since the forms and provisions used in
these surplus lines policies are not reviewed, approved or
regulated by the Division of Insurance.
Exactly what extended reporting period, individual tail policy or
other tail coverages might be available to an attorney who is
retiring, ceasing practice or in any other way changing or
modifying his law affiliation or practice, will necessarily depend
upon the particular policy then insuring him, as well as the
insurance market in general. He must carefully review and consider
the choices provided to him by his policy and consult, either with
his insurance broker or with an informed professional knowledgeable
about such policies and their coverages, to address any doubts or
questions he might have.
It is imperative, however, that he conduct that review, analysis
and consultation. He definitely should not elect to forego coverage
in the future for claims that might result from his past actions
In some rare, non-litigious and utopian universe, ignorance may
well be bliss. But that aphorism provides no comfort or protection
in today's litigious climate. As observed in another context by the
noble and worthy fool in As You Like It, "thereby hangs
Richard R. Eurich is a senior partner at Morrison Mahoney
LLP, primarily concentrating in insurance policy
interpretation, coverage, bad faith and extra-contractual liability
litigation and issues. He is chairman of the MBA Insurance
Committee, and is an instructor and frequent speaker on insurance
law and insurance-related topics.
1Chas. T. Main, Inc. v. Fireman's Fund Ins. Co., 406
Mass. 862, 865 (1990).
2See e.g., Hendrickson v. Sears, 365 Mass. 83,
91 (1974) (passage of 10 years between alleged negligent
certification of title and commencement of action).
3M.G.L., c. 260, §4.
4Hendrickson 365 Mass. at 91 (1974).
5M.G.L., c. 260, §7.
6M.G.L., c. 260, §12.
7See Murphy v. Smith, 411 Mass. 133, 136-138
8McStowe v. Bornstein, 377 Mass. 804, 808 (1979).
9M.G.L., c. 260, §10.
11Hanover Ins. Co. v. Golden, 436 Mass. 584, 587
(2002), quoting Rubenstein v. Royal Ins. Co., 429 Mass.
355, 358 (1999).