CHICAGO — Law firms and legal professionals put their own professional liability coverage in jeopardy unless they comply with insurers' requirements.

Voluntary payments to settle liability litigation against an attorney or firm, being a co-counsel in a case, and fraudulent payments to lawyers have been significant issues affecting lawyers' professional liability in the past year or two, panelists said during the 12th annual Legal Malpractice and Risk Management Conference in Chicago.

Law firms and legal professionals may violate the voluntary payment clause in a legal malpractice policy when making a settlement without the insurer's prior consent, said David A. Grossbaum, partner and leader of the insurance services practice group at law firm Hinshaw & Culbertson L.L.P. in Boston, the firm that hosted the March 6-8 conference.

Quick settlements of liability claims against law firms that are made under pressure may be too high, the panelists said.

Law firms need to inform insurers of such payments, said Christopher Piety, vice president at Aspen Insurance Holdings Ltd. in San Francisco.

If lawyers don't comply, “we consider that concealment,” he said.

“Normally, quick-settlement offers don't turn out to be that way,” Mr. Piety said.

Some law firms settle liability claims to avoid sullying their reputation in the marketplace, said Sal Concu, managing director and counsel of bond and financial products professional liability claims for The Travelers Cos. Inc. in Jericho, N.Y.

Insurers are focused on potential losses and are less concerned about reputational risks facing a law firm, he said.

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Law firms also can use hot lines and risk management advice offered through their insurer, Mr. Concu said, noting that most insurers offer preclaim assistance services.

“A lot of carriers offer that and insureds should check their policies,” he said.

Lawyers who are defrauded by being given fake cashier's checks or who deal with “fake” Internet clients “mostly” have coverage available after a loss, Mr. Grossbaum said.

Such losses typically fall under professional errors and omissions policies, Mr. Concu said. While some insurers have a “handling funds” exclusion, fidelity coverage most likely would cover such an exclusion.

In a separate session, attorneys serving as co-counsel could be held liable for errors and omissions claims even if they did not actively participate in the underlying action and knew little or nothing about the claims in the litigation, panelists said.

Lawyers can avoid such liability by carefully lending their name to pleadings and motions.

“Know thy brother,” said David P. Hartnett, partner at Hinshaw & Culbertson in Coral Gables, Fla. “You need to be aware and watch out. It makes a lot of sense, but be careful what you put your name on.”

More than 300 lawyers and insurance professionals attended the conference. Next year's conference will be held March 5-7, 2014, also at the Westin Chicago River North. For more information, visit www.lmrm.com.