A lawyer charged with steering a company through a crisis—whether a high profile securities fraud or sexual harassment claim, a criminal investigation or a catastrophic product failure—must consider a host of crucial issues while advising the client. Insurance coverage should be high on that list.
The first, and critical, step is to identify all potentially applicable policies and notify those insurers. While the company’s risk manager or broker typically is charged with this task, counsel should review this effort in a crisis situation and make sure that no possible sources of coverage are overlooked. Possible coverages include directors and officers or management liability, partnership liability, errors and omissions, employment practices liability, employee benefits and general liability policies. Also consider whether board members face personal exposure, and may have separate coverage to protect them. An outside board member who has been placed on the board by an investor or strategic partner may be entitled to outside entity coverage under the insurance carried by his or her employer. Or a board member may have purchased stand-alone independent director liability coverage.