Earlier this month, the 7th Circuit affirmed a district court order that held an insurer properly denied coverage to the insured law firm based on its failure to comply with the reporting requirements under its claims-made professional liability policy. Koransky, Bouwer & Poracky, P.C. v. The Bar Plan Mutual Insurance Co., No. 12-1579, 2013 U.S. App. LEXIS 6558 (7th Cir. Apr. 2, 2013). This decision cautions lawyers to consider carefully the circumstances in which the provision of legal services may give rise to a claim for legal malpractice.

The underlying litigation arose out of the law firm’s representation of a potential buyer in the purchase of a Rite Aid drugstore in Ohio. The law firm of Koransky Bouwer drafted and executed a sales contract on behalf of the buyer and sent the seller’s counsel a copy of the agreed-upon contract. The seller executed and returned the contract on January 31, 2007, and the buyer executed the contract on February 9, 2007. On February 11, 2007, the seller’s counsel inquired about the status of the contract. The law firm advised that the contract was executed. In fact, Koransky Bouwer had inadvertently misfiled the contract and failed to deliver it to the seller.