11.17 Insurance Exclusions
Lawyers should be aware of potential policy exclusions which may apply in certain circumstances where lawyers may be providing legal services to businesses in which they hold an interest. Other exclusions apply when lawyers are acting as directors or officers, or are engaged in ancillary businesses which are not the practice of law.
The Alberta Lawyers’ Professional Liability and Trust Safety Insurance Group Policy covers lawyers for losses arising from professional negligence, in the delivery of professional services. The receipt and distribution of investment funds, whether through trust or otherwise, are not considered to be professional services and any losses associated with such activities will not be insured.
Paragraph 3.14 of policy excludes coverage related to any claim against a lawyer by an enterprise in which the insured lawyer held an interest of at least 50%. “Enterprise” is defined in the policy, and includes any business, corporation, proprietorship, or firm, or essentially any legal or commercial entity. The lawyer’s interest may be direct or indirect, and the amount of coverage is decreased by the extent of the lawyer’s interest in the enterprise.
Lawyers are also not covered for losses arising from ancillary activities in which they engage. “Ancillary Activities” are defined in the policy as those of a quasi-legal or non-legal nature, and include such things as accounting, investment advice, brokerage services, and real estate development and appraisal work. Such services are rendered independently from a legal practice and are pursued for compensation or personal benefit. At times, a lawyer’s pursuit of ancillary business opportunities may place them in conflict with a client’s interests. It is important to ensure that your client is aware of the capacity in which you are acting when you are providing certain services which are independent from other legal services you provide.
Finally, the lawyers’ compulsory insurance does not cover lawyers against losses arising while they are acting as corporate directors or officers.