General Counsel on the Hot Seat — At Least There’s Insurance…Right?

Today, a lawyer who serves as general counsel in an organization has great and sometimes conflicting responsibilities. For a case in point, see the settlement between the Department of Justice and Prudential Equity Group. Compliance Week covered this story in November in the column titled “Settlement Puts GC on the Hot Seat.”

There is increased exposure to liability if the head lawyer of a company has to sign a deferred prosecution agreement and accept responsibility for ensuring compliance with law in an organization. But, if something goes wrong, does the general counsel have insurance coverage? There is an interesting debate brewing among professional liability insurance experts as to whether an in-house lawyer has coverage under a company’s “directors and officers” liability insurance policy, thereby entitled to a defense and indemnity in an instance where there is alleged liability in a civil or regulatory proceeding.

It has become increasingly difficult to attract talented lawyers to take on the complex role of general counsel, and the potential absence of adequate insurance coverage might further exacerbate this difficulty.


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