Publications

Scope of Prior Knowledge Exclusions in Professional Liability Policies

November 9, 2009
New York Law Journal

Last Fall, we discussed the Appellate Division, First Department’s ruling in Executive Risk v. Pepper Hamilton, in which the First Department adopted a narrow view of the prior knowledge exclusion, finding that the exclusion only applies where the insured law firm has a reasonable belief that claims may be filed against it as a result of its own conduct. The Court of Appeals, however, clearly disagrees. In a decision written by Judge Theodore T. Jones and issued on Oct. 20, 2009, the Court of Appeals reversed the First Department, ruling that the prior knowledge exclusion bars coverage where an insured law firm has a reasonable belief that claims may be filed against it as a result of wrongful conduct, regardless of whether the claims arise from the conduct of the lawyers, or, as in this case, the conduct of the client.