Do In-house Counsel’s Need Additional Insurance?
YES, definitely - Over the years the roles of in-house counsel members have increased as with the number of lawsuits brought against the in-house counsel. Their in-house roles expand as their profile within the corporation is being raised.
In-house counsel members have duties to various entities:
- The corporation including its board of directors and its shareholders
- The corporation’s employees
- Third parties such as the public and others who rely on counsel’s statements
- To all regulatory bodies.
With more responsibilities come more risk and opportunity for potential conflicts. Just as lawyers in the private sector can be sued by their clients for negligence, theft, or fraud, so too can corporations make the same claims against their in-house counsel.
Errors and Omissions (E&O) Coverage:
Provincial law societies insure their members against negligence in the rendering of legal support, and extending coverage to claims made by their employers. However, errors and omissions coverage will only apply if the claim relates to the provision of legal support versus business advice that would be out considered out of bounds. This could present potential problems where the council member is a member of the business team and the nature of the advice given has aspects of a commercial or corporate nature.
Professional Liability (D&O) Coverage:
In-house council members who also sit on corporate boards may also be at risk for claims made against directors and officers. The courts typically will not hold directors and officers responsible provided they act in good faith and do not breach fiduciary and statutory duties. However, in-house counsel who sit in on boards are held to a higher standard of care than directors as they are deemed to know the law and have responsibility to ensure the corporation acts ethically, reputably, and consistent with the corporations responsibilities to its constituents and the public.
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Original article source: Do in-house counsel need additonal insurance?