No E&O Coverage for Attorney Alleged to Have Aided Wife in Trade Secret Misappropriation
A recent E&O coverage ruling from the Southern District of Georgia offers a useful guide to where professional liability insurance ends—and personal exposure begins. In ALPS Prop. & Cas. Ins. Co. v. Cohen the court held that a professional liability insurer owed no duty to defend an attorney against allegations that he conspired with his wife, a senior executive at a sperm bank, to misappropriate trade secrets.
In the case, the company alleged that the husband and wife conspired to misappropriate business information when the wife forwarded company emails and confidential documents to her husband’s personal email address more than twenty times between 2022 and 2024. The company further alleged that the attorney knowingly received the materials, recruited another defendant to use his IT computer access to steal additional protected files, and aided his wife in violating the restrictive covenants in her employment agreement.
Although the attorney provided legal services to the company, the court made clear in its order that the attorney’s alleged misconduct was not the practice of law and fell outside the scope of the attorney’s E&O insurance coverage:
“Receiving confidential documents and conspiring to steal trade secrets do not involve ‘specialized skill or training,’ as required by a lawyer’s work performing professional services.”
Attorneys carry professional liability insurance with the expectation that the insurer will respond when a claim arises from their legal work. However, attorney policyholders need to understand that their E&O policies have limits and may not cover acts that are outside the scope of their legal representation. Professional liability insurance is a backstop against the predictable consequences of practicing law, such as a missed deadline. This ruling makes clear that professional liability insurance is not a backstop against conduct that occurs in proximity to a law practice but does not involve the practice of law.
Protecting Your Business
Trade secrets cases can sometimes involve professionals whose access is harder to monitor and investigate—including spouses or relatives of employees. To protect themselves, businesses can implement data loss prevention tools (such as flagging outbound emails to personal domains) and audit privileged IT access.
If you or your company have questions about information protection or theft, please feel free to contact our Noncompete and Trade Secrets team.
BFV summer associate Yunseo Ki, a student at Emory University School of Law, contributed to this post.
Benjamin Fink is known for his work in noncompete, trade secret and competition-related disputes. A shareholder at Berman Fink Van Horn, Ben concentrates his practice in business and employment litigation.
