Insurance Protection for Attorneys

Professional Liability Coverage for Attorneys

To protect against the many risks facing attorneys and/or law firms, as well as to satisfy any liability insurance disclosure requirements, it is wise to purchase lawyers’ professional liability insurance coverage. While there are many coverage options available, typical policies feature the following:

     • Protection from demands, suits or proceedings for damages or injunctive relief

     • A “claims made” or “claims made and reported” policy and a “duty to defend”
     or “non-duty to defend” basis

     • Defense against claims alleging wrongful acts

          ◦ Wrongful acts and claim definitions are expanded and broad

     • Extensions to pro-bono or moonlighting work, or “cocktail party” advice
     by lawyers

     • Advance of defense costs, even if allegations are found to be groundless

     • Coverage for non-client claims

     • Arbitration of a coverage dispute between the insurer and the insured

     • Punitive damages coverage, or coverage of fines, statutory penalties
     and sanctions

     • Limits on deductibles, or deductibles treated on an aggregate basis

Professional liability coverage for attorneys and law firms in today’s business climate is a necessity, and in some cases is legally required. Although the overall number of legal malpractice claims is leveling off, the number of large legal malpractice claims is sharply rising. Every malpractice insurer that was surveyed for the Lawyers’ Professional Liability Trends: 2012 study paid or participated in paying claims in excess of $50 million. Similarly, nearly all surveyed organizations saw anywhere from a 6 to 21 percent increase in the amount of claims totaling more than $500,000 in 2012.

These dramatic increases are due in part to a weakened economy in which attorneys are forced to change jobs more frequently or practice in new areas of the law. Additionally, newer methods of communicating (email, social networking sites) and using digital information (electronic filing of court records, electronic document storage) regularly expose attorneys and law firms to the potential for malpractice claims. It is imperative that attorneys and law firms recognize emerging legal malpractice risks and purchase coverage to protect against those risks.

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