Author: Priya Cherian Huskins
Employed lawyers professional liability (ELPL) insurance responds when an in-house lawyer — think general counsel or a staff employee — is accused of malpractice. That said, it's important to note that being sued for malpractice as an employee by your employer is rare.
Nonetheless, it's important to understand this type of coverage for employed lawyers. In this article, I will help separate fact from fiction with a focus on California specifically.
If you're working elsewhere, this article will provide a framework that you can use to consider the issues, but you'll want to explore the law of the state where you're employed.
The big concern: Being sued by your employer
When in-house lawyers face sticky situations, they often wonder if they'll be sued by their employer for malpractice. As a practical matter, employers don't sue their in-house attorneys for malpractice; they just fire them.
So, that begs the question: What if they fire you and then also want to sue you?
Unlikely.
California Labor Code Section 2802 says that employers must indemnify employees for losses incurred as part of their job function:1
2802. (a) An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful. …
In other words, if your California employer sued you, they might have to turn around and indemnify you.
If you're not in California, you may want to check to see if your controlling state labor code offers similar protection.
When do you need employed lawyers' insurance?
Given that employers typically don't sue their employees for malpractice, when is ELPL useful? Here are a few scenarios:
1. When others see you as their lawyer
Say, for example, during day-to-day dealings with other employees, someone casually asks a question about whether he should exercise his stock options, or should challenge a speeding ticket, or object to an apartment eviction.
If this person now perceives that you're his lawyer because of that exchange, it's possible that he could sue you for malpractice if he becomes unhappy with your advice.
Ideally, you would avoid this sort of risk of being sued for malpractice by refraining from casually giving advice to folks who aren't your clients.
Realistically, however, withholding advice isn't always possible; in such cases, employed lawyers insurance can provide an extra layer of protection.
Your best practice is to be deliberate about refraining from giving legal advice to those with whom you don't want to have an attorney-client relationship.
If you're in a work environment where, as a cultural matter, you feel obligated to answer these types of questions, ELPL is something you might consider.
The same is true if part of your job is to give advice to third parties that aren't technically the same as your employer; for example, the charitable trust "arm" of your employer.
2. When you're moonlighting
Employers sometimes encourage their employees to moonlight on a pro bono basis. ELPL responds if you're sued for malpractice because of these activities.
3. For disbarment proceedings
ELPL typically covers your defense costs should you find yourself the subject of a hearing in front of your state bar.
4. When you're concerned that your employer won't indemnify you
What if you work for an employer that you believe won't defend you if a third party, such as a vendor or customer, sues you for legal malpractice?
Or, perhaps you're worried that your company might be insolvent (and thus can't indemnify you) at the time of the suit. These are both scenarios where ELPL insurance can help.
How employed lawyers' insurance works
ELPL can cover the general counsel of a company, other staff attorneys and, in some cases, legal assistants and paralegals acting under the supervision of an in-house attorney.
Some policies cover attorneys who aren't employed by a company but who are acting on behalf of the company pursuant to a written agreement.
Typical coverage limits for employed lawyers' policies range from $1 million to $5 million. The limit a company will purchase depends on factors like the risk tolerance of the company, the number of employed lawyers on staff and the nature of the legal services provided.
The policy usually covers:
- All claims made against employed lawyers (unless specifically excluded) that arise out of the performance of, or alleged failure to perform, legal services for the employer
- Legal fees and expenses incurred in defense of employed lawyers accused of legal malpractice
- Amounts paid in damages or settlements, in some cases
- Punitive damages with "most favorable jurisdiction" language (with some insurers)
Some typical exclusions are as follows, though many can be negotiated away or are no longer a problem in more modern forms:
- Securities claims (some carriers will give back ["carve back"] this coverage for an additional premium)
- Liability arising from non-legal professional services
- Employment practices claims against the employer (some policies can include coverage for claims made against employed lawyers by current or former directors, officers or employees.)
- Other applicable insurance, such as Directors and Officers (D&O) insurance
- Fines, penalties and punitive or exemplary damages
- Trade secret misappropriation
- Employee Retirement Income Security Act (ERISA) and related acts violations
- Bodily injury, emotional distress and property damage
- Pollution liability
- Prior acts, prior knowledge or prior notice of a claim, or circumstance before a policy's inception date
- Prior and pending litigation
- Wrongful acts committed prior to the retroactive date (including interrelated wrongful acts)
Another typical exclusion is the insured versus insured clause, which refers to claims against general counsel by another insured person or employer. Some policies carve back the exclusion to provide coverage for claims brought against the employed lawyer by past or present directors and officers.
Another typical carve-back to this exclusion is the provision of defense costs for claims brought by the employer against its in-house counsel.
Another choice: Personal indemnification agreements
Senior in-house attorneys who feel they may be in the "line of fire" with the Securities and Exchange Commission (SEC) or other regulators often negotiate to receive a personal indemnification agreement from their employers.
An indemnification agreement is a contract between you and the company you serve in which the company promises to protect you for activities undertaken on behalf of the company.
These agreements promise to advance legal fees and pay losses (indemnification) on your behalf if you're named in a lawsuit in your capacity as an officer.
So, for example, in the rare event a corporation might attempt to sue you, you could turn right around and ask for your legal fees to be advanced pursuant to your pre-negotiated indemnification agreement.
In California, there is a technicality that can arise with indemnification agreements that's worth noting.
California Rule 1.8.8 Limiting Liability to Client prohibits a member of the State Bar of California from contracting with a client to limit liability to the client for malpractice. And, of course, in-house counsel's only client is the corporation that employs them.
Having said that, it's common practice for general counsel to request and receive an indemnification agreement from the company, just like any other officer would.
Backup plan: Directors and Officers insurance
D&O insurance is designed to respond on behalf of corporate officers, something that should be comforting for in-house counsel who are also officers.
In addition, public company D&O insurance programs can often include endorsements that specifically offer employed lawyers' insurance — sometimes for no additional charge.
This insurance will respond on your behalf for the usual lawsuits that you may be named in, so long as the actions in question are within the course and scope of your job.
There are some drawbacks to relying solely on a D&O program for this type of coverage, including:
- The limit of insurance is shared with the classic D&O coverage provided by the policy and the employed lawyer coverage: Sharing a policy limit means that a response pursuant to one part of the policy can mean there may not be any money left in the policy to respond to other acts covered by the policy. Directors and officers want to ensure they're covered adequately and at the same time, employed lawyers do. If there's a corporate catastrophe draining coverage, all parties may face a greater chance of being sued.
- Coverage is subject to self-insured retention (SIR): The SIR is the amount the company must pay before the insurer starts paying on a claim. For public companies, SIRs can be quite high (in the millions). Standalone ELPL insurance offers much lower SIRs.
- The employed lawyer endorsement typically won't cover moonlighting: If you're providing pro bono services and are sued for malpractice, the coverage under the D&O policy won't respond.
- You're less likely to have coverage for paralegals: Unlike with standalone ELPL insurance, paralegals aren't usually eligible as insured persons under the D&O endorsement. If this coverage is important to have, it may be possible to negotiate some coverage.
Employed lawyers' insurance: A good choice for some
For some in-house lawyers, ELPL insurance makes sense. Each in-house legal department is different. The risks in-house attorneys face depend greatly on how the legal department is structured and what specifically they do.
You'll want to work with your trusted advisors to determine whether, in your specific case, buying ELPL is a prudent choice.
When analyzing whether to buy an ELPL policy, a good first step is to assess the structure and functions of your in-house legal department.
After that, work with your trusted insurance broker to understand the nuances of what an ELPL does and doesn't cover. This review will put you in the best position to determine if this policy is right for you.
Regardless of whether you have a standalone ELPL policy, as an officer of the company, you can afford the protection of your corporate D&O insurance. Many senior in-house lawyers also seek a personal indemnification agreement as an added layer of protection.
Published September 2025
