Malpractice Insurance for New or Solo Attorneys
Professional Liability insurance is high on the to-do list of new attorneys starting a firm. Lawyers, especially new ones, have a fear that one day they will be the subject of a malpractice claim. Obtaining insurance coverage allows many lawyers to rest easier knowing that a missed deadline might not result in an expensive, out-of-pocket payout during an otherwise unblemished career.
There is often a lack of understanding by attorneys of how professional liability malpractice insurance works. Lawyers generally know they will need some sort of protection if the day comes when one of their clients suffers a loss as result of a mistake. But typically it isn't until the error is reported that these lawyers worry about the limitations of their insurance.
Industry statistics show that lawyers starting their career in private practice today are likely to have one to three claim matters during their professional career, and even more if their legal work involves a high-risk practice area such as plaintiff's personal injury or real property matters.
The fear and anxiety of a claim, even if it is meritless, can be debilitating to some lawyers and this can affect others that are unrelated to the claim. This can put a strain and worry on the relationships with other lawyers and staff.
Having a malpractice claim does not always mean a lawyer did something wrong. According to a study of malpractice claims published in 2012 by the ABA Standing Committee on Lawyer's Professional Liability, about 67% of the claims asserted against lawyers during a four-year period were abandoned without any payment to the claimant. The same studied showed that 13% of all claims asserted against lawyers developed into lawsuits against the attorneys that were eventually dismissed, with a judgment in favor of the lawyer/defendant. The remaining 19% of claims resulted in some sort of payment to the claimant, whether or not a suit had been commenced. In rare cases, 1% of all cases resulted in payment made to the claimant after a judgment was found for the plaintiff/client.
Despite the large number of unwarranted malpractice claims against attorneys that are eventually dismissed or abandoned, just being labeled by your client as negligent can be extremely time consuming, as you and your insurer proceed to formulate the response to a meritless claim. The cost of your time can start to evolve into out-of-pocket expenses if an insurance deductible payment is involved and your insurer starts incurring legal expenses while proceeding with the goal of getting your claim dismissed.
The cost of your time to meritless malpractice claims can start to evolve into out-of-pocket expenses if an insurance deductible is involved and your insurer starts incurring legal expenses while proceeding with the goal of getting your claim dismissed. Many lawyers could benefit from having a better understanding of what they are getting when they pay their professional liability premiums. By not having a full understanding of what professional liability insurance covers and what actions could put this coverage in jeopardy, lawyers are at risk of significant liability exposure and possibly experiencing a very expensive event.
Working with an expert in the area of attorney professional liability coverage can help you to evaluate all of your potential options and to come up with the best plan for ensuring that you and your firm are protected going forward.
