Partnership protection

Today, many partnership firms, while not incorporated within the meaning of the corporations law, have adopted a corporation style management structure. Adopting such a structure may expose the firm, individual partners and any other “non-partner” individuals charged with the responsibility of running the firm to claims arising from the management of the firm. This exposure is in distinct contrast to claims arising from a breach of professional duty while providing professional services to the firm’s clients; traditional professional indemnity matters.

 

Employment disputes such as unfair and wrongful dismissal, sexual harassment, workplace harassment and discrimination are becoming much more common in Australia. Partners may be personally exposed to liability arising from employment disputes along with the firm.

 

LAUW has seen many partnerships (and, more specifically, law firms) while recognising the evident exposures to their businesses, purchase off-the-shelf management liability or standalone directors and officers and employment practices liability (EPL) products. Such offerings are tailored to incorporated entities and may not offer partnership firms the specific cover they need. Key flaws in these offerings can include an indemnity provided by the firm to any partnership board member not being insured and EPL insurance not extending to cover partners (whether salaried or equity) who may have committed a wrongful act.

 

Recognising these weaknesses, PARTNERSHIP PROTECTION was developed to provide meaningful cover specifically tailored for partnership firms, including those that have adopted a corporation style management structure.

 

Among others, four key features of PARTNERSHIP PROTECTION are:

 

1. Cover is provided for both salaried and equity partners acting in the capacity of director or executive officer of the firm or any service or administration company or trust related to the firm. Cover is also provided for both salaried and equity partners in relation to employment practices liability.

 

2. Nil excess is payable where the insured receives final adjudication in their favour.

 

3. The firm retains the right and duty to defend and contest any claim. This has proven very attractive in particular to law firms who can defend a matter in-house without having to share internal management issues with an external law firm.

 

4. Partner versus partner and partner versus the firm coverage. There is no insured versus insured exclusion or consensual claim exclusion applicable. Furthermore a major shareholder exclusion only applies to claims arising from any outside directorships that may be covered.

 

Steve Walker states that interest and uptake in PARTNERSHIP PROTECTION has been strong and continues to grow. Broker and client feedback to the product has been excellent. LAUW has not been asked to manuscript a single PARTNERSHIP PROTECTION policy to date, testament to the breadth and quality of the product.

 

The uptake has been particularly strong within the legal sector and encompasses the smallest to largest firms. Policy limits are available to $20m with a sub-limit of $5m available for entity/EPL cover for the firm.

 

Crime coverage is available to a sub-limit of $1m as is statutory liability making PARTNERSHIP PROTECTION the complete management liability product for partnership firms.