Wednesday, April 1, 2015

Do uninsured firm partners lose liability protection?

SECTIONS   SUBSCRIBE MY ACCOUNT Justices to Decide Whether Uninsured Firms Lose LLP Shield Mary Pat Gallagher, New Jersey Law Journal April 1, 2015 | SHARE PRINT REPRINTS  The New Jersey Supreme Court is set to decide whether lawyers in a limited liability partnership lose their protection from being sued individually if their firm fails to maintain professional liability insurance. The justices on March 30 granted a motion for leave to appeal in Mortgage Grader v. Ward & Olivo, a legal malpractice action against a patent firm that has since split up. The trial judge held that the failure of a dissolving LLP to purchase a tail insurance policy caused it to revert to a general partnership, thereby exposing one partner to vicarious liability for the other's alleged malpractice. The Appellate Division reversed last November, saying, "We disagree with the motion judge that such a sanction is authorized and hold that when attorneys practice law as an LLP, and the LLP fails to obtain and maintain professional liability insurance as required ... the LLP does not revert to a general partnership." Rather, "violating the insurance requirement is grounds for the Supreme Court to terminate or suspend the LLP's right to practice law or otherwise discipline it," Judge Douglas Fasciale said in a precedential opinion joined by Judges Joseph Yannotti and Richard Hoffman

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