Attorney Malpractice Insurance for Law Firms and Professionals

Attorney malpractice insurance is a crucial investment for law firms and professionals to protect themselves against financial losses due to errors or omissions.

The cost of attorney malpractice insurance varies widely depending on factors such as location, experience, and type of practice.

Lawyers can expect to pay between 50 and 200 dollars per month for a standard policy.

The premiums may be higher for lawyers with a history of claims or disciplinary actions.

Policy coverage is a crucial aspect of attorney malpractice insurance. Most malpractice insurers will exclude coverage for cases between lawyers who work at the same firm.

To ensure you're covered for all types of legal services, confirm that your policy covers services like notary public, arbitrator, or mediator work, as well as title insurance agent services. Check the policy definition of "you", "your", or "insured" to confirm that all those doing work on behalf of an attorney or the firm are covered.

A claims-made policy offers coverage for a claim arising from a legal service that occurred on or after the retroactive date and was first made against an insured during the policy period. This type of policy can provide peace of mind, knowing you're protected for past and future work.

Exclusions are specific losses or risks that the policy does not cover. For example, if you were aware of the potential for a lawsuit before you obtained malpractice insurance, the insurance company will exclude that claim from coverage.

Failure to pursue a case properly can lead to malpractice claims, as it may result in a client's case being dismissed or settled for less than it's worth.

Dismissal of a case for attorney negligence is also a common reason for malpractice claims, highlighting the importance of proper case management and attention to detail.

Failure to arrange for experts or witnesses can also lead to malpractice claims, as it may deprive a client of crucial evidence or testimony.

Failure to act before statutes of limitations or calendar deadlines expire can result in malpractice claims, as it may prevent a client from pursuing a valid claim or defense.

Any action or negligence that unduly causes loss to the client can also lead to malpractice claims, emphasizing the need for attorneys to prioritize their clients' interests and well-being.

An estimated five or six percent of all private practice lawyers face charges of legal malpractice every year, making it a significant concern for attorneys in private practice.

As a law firm professional, you're exposed to various risks that can impact your practice and personal assets. According to the American Bar Association, legal malpractice is defined as any act which is negligent or wrongfully executed by an attorney who causes monetary damages to his/her client.

You need to consider the risks you face, including the services you provide, the dollar amount of your personal assets, and the dollar amounts you seek as damages. If you're running a small firm, you can likely choose a policy with lower limits, but it's still essential to speak with an experienced agent to determine how much coverage you need.

Here are some key risks to consider:

By understanding these risks and taking steps to mitigate them, you can protect your firm and personal assets from the potential consequences of a malpractice claim.

Coverage is provided for attorneys who perform title agent services through their firm. This means that if you're a lawyer doing title work for your own firm, you're likely covered. However, coverage is not available when acting as a title agent for a separate entity, so if you're moonlighting as a title agent for someone else's business, you're on your own.

According to the American Bar Association, legal malpractice is defined as any act which is negligent or wrongfully executed by an attorney who causes monetary damages to his/her client.

You need attorneys liability insurance if your state insurance commission requires it, or if your practice involves high-liability areas such as personal injury, finance, intellectual property, or if you have personal assets that could be jeopardized if a client sued you.

A systematic approach to risk management is essential to identify, evaluate, and reduce or eliminate the possibility of an unfavorable deviation from the expected outcome of legal services.

Here are some groups that need professional liability insurance:

Lawyers get sued with increasing regularity and for increasingly large amounts, even in lower-liability areas such as criminal defense and estate planning.

With a good attorney malpractice insurance policy, you can have peace of mind knowing you're protected against costly lawsuits and defense expenses.

First dollar defense is an option that allows you to pay a deductible only if there is a payment for damages, with the company paying your defense costs up to the limits of liability.

Extended reporting coverage is also available, allowing you to extend the period during which a claim can be reported after the policy expiration date, subject to underwriting guidelines.

This type of insurance is extremely common, as an estimated five or six percent of all private practice lawyers face charges of legal malpractice every year.

As a law firm owner, you're likely aware of the importance of malpractice insurance. However, there are other areas of risk that a law firm faces that can be covered under the umbrella of other insurance policies.

Directors and Officers Insurance is a must-have for law firms, as it covers actions taken by partners, board members, or lawyers acting in a capacity other than their professional duties.

Employment Practices Liability Insurance (EPLI) protects lawyers and law firms from claims of discrimination, wrongful termination, sexual harassment, and other employment-related claims.

General Liability Insurance is another essential policy that protects law firms from claims of third-party bodily injury, property damage, and advertising injuries.

Cyber Liability Insurance is a crucial policy for law firms, as it covers the cost of ransom demands, credit monitoring, and notification of impacted clients in the event of a cyberattack.

Fiduciary Liability Insurance is a necessity for law firms that advise clients in a fiduciary role, as breaches of fiduciary responsibility are often excluded from malpractice policies.

Here are some of the key types of insurance policies law firms should consider, along with their corresponding benefits:

Extended reporting coverage is a feature that allows you to extend the period during which a claim can be reported after the policy expiration date.

This type of coverage is subject to underwriting guidelines and only applies to acts or omissions prior to policy expiration.

Extended reporting endorsement, also known as tail coverage, is applicable to claims-made policies and allows you to report claims first made after a policy termination date.

However, claims must result from an event that occurred on or after the retroactive date, but prior to the policy termination date. Some carriers may waive the additional premium for this coverage in the event of an insured's death, disability, or permanent retirement.

The cost of attorney malpractice insurance can vary depending on several factors. The average cost for a solo lawyer is around $2,800, but this can increase as the size of the law firm grows.

A law firm's size is a significant factor in determining the cost of malpractice insurance. The larger the firm, the more costly the coverage will be.

Attorneys' step rating also plays a role in determining premiums. This system, used by insurers, assesses how long a lawyer has been at a firm, with premiums starting lower and increasing each year as possible exposures grow.

If you have a history of malpractice claims, your policy will cost more. This is because insurers view you as a higher risk.

The higher your policy limit, the more the premium will be. However, it's essential to carefully consider the amount of coverage your law firm needs before choosing a policy with a lower premium.

A higher deductible can also lower your policy premium. If you can afford a higher deductible, it's a good idea to consider this option.

Specializing in a high-risk area can increase your insurance costs. For example, if you specialize in a field that is frequently litigated, your premiums may be higher.

Where you practice can also impact the cost of your insurance. For example, law firms in urban areas like Los Angeles or New York may pay more for insurance than those in rural areas.

Here's a breakdown of the factors that can affect your premiums:

An insurer may lower your premiums if you have risk management practices in place. This is a great incentive to implement risk management strategies in your law firm.

A law firm's management control procedures can impact their premium, with carriers increasing the premium if these procedures don't meet certain standards.

Encouraging attorneys to use risk management tools provided by carriers can help avoid claims and improve the law firm.

A specialized insurance provider typically isn't affected by events impacting other lines of insurance, which means your firm's coverage and pricing remain unaffected.

Follows the attorney is a concept that's crucial to understand in policy administration and management. This principle essentially means that the insurance coverage follows the attorney, not just the firm they work for.

Insured attorneys are covered for all their legal services unless a specific exclusion applies. Many carriers limit coverage to work performed only on behalf of the insured firm or its predecessor firm(s). This means that if an attorney leaves the firm, their coverage might not be automatically transferred to the new firm.

A type of policy that offers coverage for a claim arising from a legal service is a claims-made policy. This policy provides coverage for claims made against the attorney during the policy period, as long as the service was performed on or after the retroactive date.

Cancellation can be a complex process, but it's essential to understand the rules. State law typically sets out the required notice for cancellation or non-renewal of insurance policies.

Non-payment of premium is a common reason for cancellation. The carrier can terminate the policy if the premium is not paid on time.

Mutual consent between the parties can also lead to cancellation. This means both the carrier and the insured agree to end the policy.

Fraud or material misrepresentation can result in cancellation. If the carrier discovers that the insured provided false information, they may terminate the policy.

Revocation or restriction of the attorney's licenses can cause cancellation. If the attorney's license is revoked or restricted, the carrier may end the policy.

An increase in the hazard insured against can also lead to cancellation. If the risk of loss or damage increases, the carrier may choose to terminate the policy.

Management control procedures are crucial for law firms to ensure they meet certain standards. This can directly impact your premium, so it's essential to have them in place.

A specialized insurance provider is typically not impacted by events affecting other lines of insurance, which means your firm's coverage and pricing will be unaffected.

Having effective management control procedures can help your firm avoid claims and improve its overall performance. This can lead to a reduction in premiums over time.

Risk management tools provided by carriers can add real value to your policy, so it's worth exploring these options.