Understanding Lawyers Professional Liability Insurance

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Lawyers professional liability insurance, also known as malpractice insurance, is a type of insurance that protects lawyers from financial losses due to errors or omissions in their work.

This insurance is essential for lawyers as it helps them manage the financial risks associated with their profession.

In the United States, lawyers professional liability insurance is not mandatory, but it is highly recommended for all lawyers.

The cost of lawyers professional liability insurance varies depending on factors such as the lawyer's experience, location, and type of practice.

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What is Professional Liability Insurance?

Professional liability insurance is a type of insurance that protects professionals, such as lawyers, from claims of negligence or errors in their work.

A lawsuit can arise from even the most seemingly minor mistakes, such as misinterpretations of the law or missed deadlines. This type of insurance helps cover the costs of defending against such claims.

Some common examples of claims that professional liability insurance can cover include errors and misguided advice, professional negligence, and contractual liability.

  • Errors and misguided advice: Protects against claims alleging mistakes, misrepresentation, and improper counsel
  • Professional negligence: Covers claims alleging you failed to meet expected professional standards
  • Contractual liability: Protects against lawsuits from unmet contractual obligations and resulting financial losses, such as missed deadlines

What Is Professional Liability Insurance?

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Professional liability insurance is a type of coverage that addresses Errors & Omissions (E&O) risks faced by providers of professional services. This insurance is a customized solution that helps protect against costly claims.

Professional liability insurance is essential for law firms, as lawyers can be sued for alleged failures to meet professional and ethical standards. Even diligent law firms are vulnerable to costly claims, including misinterpretations of the law, offering bad advice, and missed deadlines.

This type of insurance is often referred to as Lawyers Professional Liability (LPL) insurance, which is typically the most important insurance policy a lawyer or law firm can buy. It protects against claims alleging mistakes, misrepresentation, and improper counsel.

Some common exposures that professional liability insurance covers include errors and misguided advice, professional negligence, and contractual liability. This means that law firms are protected against lawsuits from unmet contractual obligations and resulting financial losses, such as missed deadlines.

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Here are some specific types of claims that professional liability insurance covers:

  • Errors and misguided advice: Protects against claims alleging mistakes, misrepresentation, and improper counsel
  • Professional negligence: Covers claims alleging you failed to meet expected professional standards
  • Contractual liability: Protects against lawsuits from unmet contractual obligations and resulting financial losses, such as missed deadlines

Other types of claims that professional liability insurance covers include employment-related lawsuits, bodily injury and property damage claims, potential claims you're aware of but fail to disclose, and breach of fiduciary duty.

Lawyers Professional Liability

Lawyers Professional Liability is a type of insurance that protects law firms from costly claims. It's often the most important insurance policy a lawyer or law firm can buy.

Legal malpractice claims can happen when an attorney allegedly fails to meet the standard guidelines of professional and ethical conduct. This can include misinterpretations of the law, offering bad advice, missed deadlines, or conflicts of interest.

Even the most diligent law firms are vulnerable to such costly claims. The potential exposures are many, and include things like errors and misguided advice, professional negligence, and contractual liability.

Here are some examples of what Lawyers Professional Liability insurance can cover:

  • Errors and misguided advice: Protects against claims alleging mistakes, misrepresentation, and improper counsel
  • Professional negligence: Covers claims alleging you failed to meet expected professional standards
  • Contractual liability: Protects against lawsuits from unmet contractual obligations and resulting financial losses, such as missed deadlines

In fact, legal malpractice lawsuits have become all too common. A Bergen County jury returned a $343,258 verdict in a legal malpractice lawsuit alleging that attorney Robert Lysiak failed to notify his client of potential environmental contamination on a property.

Law Firm Insurance Options

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Crum & Forster offers customized Lawyers Professional Liability Insurance for small, midsize and large law firms, providing protection against claims of wrongful acts, errors or omissions.

Their policy can be tailored to meet the specific needs of your law firm, with options including a $5,000,000 (Admitted) Primary or Excess policy, and the ability to get admitted in all 50 States and D.C.

For small law firms with 5 or fewer attorneys, Professional Liability Insurance is available through the Protexure Insurance Agency, Inc. with competitive pricing and tailored policy solutions.

Non-admitted policies are also available, and law firms with 6 or more attorneys (1+ attorneys in New York) can get additional coverage options like bilateral extended reported period (ERP) and client discrimination extension.

Here are some of the key coverage options for midsize and large law firms:

  • Bilateral extended reported period (ERP)
  • Client discrimination extension (not available in NY)
  • Disciplinary expense reimbursement
  • Mediation deductible credit of 50%
  • Multiple ERP options
  • Personal injury / advertising extension
  • Predecessor firm coverage
  • Regulatory inquiry extension
  • Spouse and domestic partner extension
  • Subpoena assistance extension
  • Options for aggregate deductible, defense expenses in addition to the limit and first-dollar defense deductible

Law Firm Insurance

Crum & Forster offers customized Lawyers Professional Liability Insurance for small, midsize, and large law firms, providing protection against claims of wrongful acts, errors, or omissions, and other exposures arising from the performance of professional services.

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Their extensive experience and tailored coverage make them a key market for Professional Liability Insurance throughout the U.S. They offer policies with a $5,000,000 (Admitted) Primary or Excess limit, and are admitted in all 50 States and D.C., with non-admitted policies also available.

The policies are designed to provide financial protection to law firms with 6 or more attorneys, offering a range of extensions and options, including bilateral extended reported period (ERP) and client discrimination extension (not available in NY).

Some of the key features of their policies include disciplinary expense reimbursement, mediation deductible credit of 50%, and multiple ERP options. They also offer personal injury/advertising extension, predecessor firm coverage, and regulatory inquiry extension.

Here's a summary of some of the key features of Crum & Forster's Lawyers Professional Liability Insurance policies:

Coverage for Law Firms

Crum & Forster offers customized Lawyers Professional Liability Insurance for small, midsize, and large law firms. Their extensive experience and skill in tailoring coverage make them a key market for Professional Liability Insurance throughout the U.S.

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Their Lawyers Professional Liability (LPL) policy insures attorneys and their firms against claims of wrongful acts, errors or omissions, and other exposures arising from the performance of professional services. The policy is available with limits up to $5,000,000 and is admitted in all 50 states and D.C.

For small law firms with 5 or fewer attorneys, Crum & Forster has an exclusive program with the Protexure Insurance Agency, Inc. This program offers tailored policy solutions and competitive pricing for solo practitioners and small law firms.

Here are some key features of Crum & Forster's Professional Liability Insurance for law firms:

The Protexure Lawyers Program offers a wide range of deductible options, including limits up to $3 million per claim. Full Prior Acts coverage is also available, as well as a right and duty to defend policy. Additionally, the policy provides up to $1,000 per day for loss of earnings due to required claim-related appearance, up to $10,000 policy aggregate.

Crum & Forster also offers risk-management help line and website available via Hinshaw & Culbertson, LLP. Their policyholders have access to a range of services, including agency resources, agency service center, audits & inspections, claims, loss control, medical management, physician look-up, policyholder service center, return to work, and more.

Policy Features and Enhancements

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You'll find various coverage enhancements available, including public officials, mutual consent on defense counsel, and punitive damages. These enhancements can provide added protection for your law firm.

Some notable features include limits up to $3 million per claim and a wide range of deductible options. This allows you to tailor your policy to your firm's specific needs.

Here are some key policy features and enhancements:

  • Available coverage enhancements: public officials, mutual consent on defense counsel, punitive damages, career coverage, mergers and acquisitions increase reporting window from 30 to 90 days, primary and excess nonprofit D&O sub-limit, claim expenses outside the limit of liability, title agency coverage, expert witness and teaching services, and ability to soften hammer clause.
  • Coverage for Midsize and Large Law Firms: bilateral extended reported period (ERP), client discrimination extension, disciplinary expense reimbursement, mediation deductible credit of 50%, multiple ERP options, personal injury/advertising extension, predecessor firm coverage, regulatory inquiry extension, spouse and domestic partner extension, subpoena assistance extension, and options for aggregate deductible, defense expenses in addition to the limit and first-dollar defense deductible.
  • Other notable features: full prior acts coverage, right and duty to defend policy, up to $1,000 per day for loss of earnings due to required claim-related appearance, up to $10,000 policy aggregate, up to $25,000 per policy period for disciplinary proceedings, up to $25,000 per policy period for data breach, and up to $25,000 per policy period for subpoena assistance.

Available Coverage Enhancements

Available coverage enhancements can greatly benefit professionals and businesses. Public officials are included in available coverage enhancements.

Mutual consent on defense counsel is also available, which can be a huge relief in difficult situations. Punitive damages are covered, but it's essential to understand the specifics of this coverage.

Career coverage is another valuable enhancement, providing protection for professionals transitioning to new roles. Mergers and acquisitions increase the reporting window from 30 to 90 days, giving businesses more time to adjust.

A primary and excess nonprofit D&O sub-limit is available, offering targeted protection for nonprofit organizations. Claim expenses outside the limit of liability are also covered, providing an added layer of security.

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Title agency coverage and expert witness and teaching services are also included in available coverage enhancements. The ability to soften the hammer clause can be a significant advantage in certain situations.

Here are some available coverage enhancements in a concise list:

  • Public officials
  • Mutual consent on defense counsel
  • Punitive damages
  • Career coverage
  • Mergers and acquisitions increase reporting window from 30 to 90 days
  • Primary and Excess nonprofit D&O sub-limit
  • Claim expenses outside the limit of liability
  • Title agency coverage
  • Expert witness and teaching services
  • Ability to soften hammer clause

Policy Form

The policy form is where the details of your professional liability insurance come together. It's essentially a comprehensive outline of what's covered and what's not.

You'll find a broad definition of insured to include a wide range of professionals and services. This means that your policy will cover a broad spectrum of activities, giving you peace of mind.

Supplementary payments are also a key feature of the policy form. These payments can help cover additional costs associated with defending a claim.

One of the standout features of the policy form is the inclusion of innocent insured coverage for intentional acts. This means that if an insured individual unintentionally commits an act that leads to a claim, the policy will still provide coverage.

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The policy form also includes personal injury coverage, which can help protect you in the event of a claim related to libel, slander, or other forms of personal injury.

Here are some of the key features of the policy form:

  • Duty to defend
  • Supplementary payments
  • Broad definition of insured to include
  • Broad definition of professional services
  • Innocent insured coverage for intentional acts
  • Personal injury coverage
  • Unlimited and non-practicing ERP options

Risk Management and Mitigation

Risk management and mitigation are crucial components of lawyers professional liability insurance. Having a comprehensive risk management plan in place can help prevent claims and reduce the likelihood of lawsuits.

Munich Re Specialty offers complimentary risk mitigation services to insureds who purchase their E&S Lawyers Professional Liability coverage. This includes real-time consultations with senior risk management attorneys, as well as practice tools and templates to help prevent errors and omissions.

Some of the specific benefits of Munich Re Specialty's risk management services include:

  • Real-time, attorney-client privilege consultations with senior risk management attorneys
  • Practice tools and templates
  • State bar ethics rules and opinions
  • Five hours of ethics CLEs for each insured attorney

Risk Mitigation Services

Risk Mitigation Services can be a game-changer for businesses and individuals alike. By implementing these services, you can significantly reduce the risk of costly lawsuits and other financial losses.

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One way to access risk mitigation services is through complimentary offerings from insurance companies like Munich Re Specialty. They provide Attorneys Risk Management from Barron & Newburger, a free comprehensive loss prevention service for insureds who purchase their E&S Lawyers Professional Liability coverage.

Insureds who take advantage of this service can expect to receive real-time consultations with senior risk management attorneys, who can provide guidance on how to avoid common pitfalls and stay compliant with state bar ethics rules and opinions.

Practice tools and templates are also included, which can help insureds streamline their workflow and reduce the risk of errors. Additionally, they'll receive five hours of ethics CLEs for each insured attorney, which can help them stay up-to-date on the latest developments in their field.

Here are some specific benefits of the Attorneys Risk Management service:

  • Real-time, attorney-client privilege consultations
  • Practice tools and templates
  • State bar ethics rules and opinions
  • Five hours of ethics CLEs for each insured attorney

Missed Limitation Period

Missing a statute of limitations can be a costly mistake. The attorney in the example missed the deadline, resulting in a settlement of $150,000.

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Failing to properly calendar deadlines can lead to missed opportunities and financial losses. This mistake is a clear example of how a seemingly minor oversight can have significant consequences.

A missed statute of limitations can result in a loss of a potential claim or lawsuit. This is precisely what happened in the example, where the client missed their chance to file a complaint.

It's essential to stay on top of deadlines and calendar important dates, especially when it comes to time-sensitive matters like statute of limitations.

Conflict of Interest

Conflict of interest can arise when an attorney represents both spouses in drafting a premarital agreement and later represents one of them in divorce proceedings, as seen in a case where the attorney was hired to represent the husband. This can lead to a lawsuit, like the one filed by the wife against the attorney for failing to obtain written conflict waivers.

The wife's lawsuit against the attorney resulted in a settlement of $250,000. This outcome highlights the importance of avoiding conflicts of interest to protect clients' interests and prevent costly lawsuits.

Professional Liability Insurance Capabilities

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Our customized coverage solutions address the Errors & Omissions (E&O) risks that providers of professional services face in the course of doing business.

We offer Lawyers Professional Liability (LPL) insurance, also known as legal professional liability or legal malpractice insurance, which is typically the most important insurance policy a lawyer or law firm can buy.

This type of insurance protects against claims alleging mistakes, misrepresentation, and improper counsel, as well as claims alleging you failed to meet expected professional standards.

Our LPL insurance covers a wide range of potential exposures, including errors and misguided advice, professional negligence, contractual liability, employment-related lawsuits, bodily injury and property damage claims, potential claims you're aware of but fail to disclose, and breach of fiduciary duty.

Here are some key features of our LPL insurance:

  • $5,000,000 (Admitted) Primary or Excess
  • Admitted in all 50 States and D.C.
  • Non-admitted policies are also available

Insurance Providers and Services

Insurance providers like Crum & Forster offer customized Lawyers Professional Liability Insurance policies for small, midsize, and large law firms.

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Their Lawyers Professional Liability (LPL) policy insures attorneys and their firms against claims of wrongful acts, errors or omissions, and other exposures arising from the performance of professional services.

Crum & Forster's policy offers $5,000,000 (Admitted) Primary or Excess coverage, and they are admitted in all 50 States and D.C., with non-admitted policies also available.

OAMIC, on the other hand, provides a local touch, serving only Oklahoma lawyers and caring deeply about meeting the needs of each insured lawyer.

OAMIC's LPL policy is considered second to none, offering a level of service that's hard to find elsewhere.

Here are some key features of Crum & Forster's policy:

  • $5,000,000 (Admitted) Primary or Excess
  • Admitted in all 50 States and D.C.
  • Non-admitted policies are also available

Negligence and Liability

Professional liability insurance, also known as lawyers professional liability insurance, can help protect attorneys from negligence-related lawsuits. This type of insurance can provide financial protection in the event of a lawsuit.

A wealthy client hired an attorney for estate planning services, and the attorney made an error in calculating owed gift taxes, resulting in a $500,000 settlement. This is just one example of how negligence can lead to costly lawsuits.

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In some cases, negligence can result in significant financial losses for clients. For instance, a tech company was awarded a $32.2 million legal malpractice verdict against Dentons after the firm failed to adequately defend a patent enforcement case.

Negligence can take many forms, including errors in judgment, failure to act, or failure to communicate. Attorneys who fail to meet their professional obligations can face costly lawsuits.

A jury returned a $343,258 verdict in a legal malpractice lawsuit against an attorney who failed to notify his client of potential environmental contamination on a property. This is just one example of how negligence can lead to significant financial losses for attorneys.

Here are some notable examples of negligence-related lawsuits:

  • Jury awards $343K in legal malpractice suit by purchaser of polluted property
  • Dentons suffers $32 million lawsuit loss for malpractice
  • Troutman Pepper faces $59M malpractice suit for alleged negligence

Timothy Gutkowski-Stoltenberg

Senior Writer

Timothy Gutkowski-Stoltenberg is a seasoned writer with a passion for crafting engaging content. With a keen eye for detail and a knack for storytelling, he has established himself as a versatile and reliable voice in the industry. His writing portfolio showcases a breadth of expertise, with a particular focus on the freight market trends.

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