Lawyer’s Professional Liability Insurance Provides Vital Protection from the Hazards of Practicing Law
In a complex legal case, your law firm hires a contract attorney to take some of the workload off your shoulders. As it turns out, that lawyer wasn’t up to par and fails to file important documents on time, causing you to lose the case. Naturally, the client files a lawsuit against both the contract lawyer and your firm. If you don’t have lawyer’s professional liability insurance, your whole law firm is on the hook.
Practicing law is a complex endeavor, and like doctors, lawyers are vulnerable to malpractice lawsuits. In most cases, a lawyer won’t be sued for operating on the wrong limb, but they can be sued for a variety of reasons. Lawyer’s professional liability insurance is designed to protect you from lawsuits that could cripple your entire firm. The cost of defending even a frivolous lawsuit can put you out of business.
While most attorneys maintain a strict code of conduct, they could still face a lawsuit from a disgruntled client. In fact, given that lawyers usually are the ones doing the suing, many end up being sued every year. According to the American Bar Association, thousands of lawyers were sued or disciplined in 2009, and the trend remains a real threat.
Lawsuits against lawyers can happen for many reasons. Your client can’t sue you for losing the case in court, but your client could claim that you acted improperly in some way. Negligence is a common claim made by clients. The contract lawyer in the above example was guilty of negligence. Other forms of negligence include giving the wrong advice to a client, even if that advice was based on your best judgment at the time it was given. Creating a conflict with a client is another form of negligence.
Breach of fiduciary duty is another common cause of client-initiated lawsuits against attorneys. This includes putting your interests ahead of your client’s interests. The ABA’s code of conduct prohibits conflict of interest and unfair profiteering at the expense of a client, but lawyers still make these mistakes. Failure to disclose important information about your client’s case is also a breach of fiduciary duty.
Most attorneys do their best to run an honest business, but another common source of lawsuits against lawyers is deceptive business practices, such as falsifying credentials or areas of expertise. And many lawsuits against attorneys initiated by their former clients are indeed cases of sour grapes. In most states, the client must present testimony from expert witnesses to make a case against you.
Lawyer’s Insurance Protects You from Errors, Defense Costs, and More
Many clients today are quick to turn the tables and sue you if their case doesn’t turn out the way they expected. And no matter how professional and diligent your law firm is, mistakes happen, and you can be sued for those mistakes. Lawyer’s insurance will help protect your livelihood and your financial security.
Lawyer’s professional liability insurance (PLI) includes coverage for errors and omissions, commonly called E & O. Most doctors know the importance of protecting themselves from malpractice lawsuits and carry enough E & O insurance as a result. Lawyers need this protection as well because their profession is highly technical and specialized. Mistakes can happen despite the best professional intentions, and E & O insurance is vital to protect you from the consequences.
But most lawyers will need more than just basic PLI. Civil liability insurance is essential to protect you from lawsuits caused by real or perceived defamation, breach of contract, and other issues related to the practice of law. And because many lawsuits are filed years after the fact, lawyers would benefit from extended reporting endorsements.
This kind of “tail” coverage covers events that occurred during the policy life but aren’t reported until after the policy period ends. Lawyers can also include a prior acts endorsement that protects them from claims made based on actions before the policy took effect. Known as nose coverage, this option costs less than tail coverage, which is usually 2 or 3 times the cost of the expiring premium.
A PLI policy won’t protect you from criminal acts that you or one of your firm’s lawyers or staff commits. Like all insurance, you must define the specific risks you want covered and for how long. But as a lawyer, you should know that when you break the law, you’re on your own. No insurance policy can protect you in those cases.
Lawyer’s Professional Liability Coverage Keeps Your Firm on Firm Ground
Emotions can run high in almost any legal case. And when clients don’t get what they want from one lawsuit, they’re likely to try a second lawsuit, one directed at their lawyer. You could be sued for no fault of your own. In the case of the incompetent contract lawyer, you could lose your whole practice because of the negligence of a stranger.
Because you can’t know what future hazards might appear today or tomorrow, carrying enough PLI is essential for your career. Carrying adequate coverage means knowing the limits of your practice and understanding what insurance can do for your professional career. PLI is not a luxury but a necessity.
Finding the right insurance policy for your law practice isn’t rocket science. Insurance professionals, like lawyers, want their clients to understand exactly what insurance does and does not do. The cost of PLI is far less than the cost of a career-ending lawsuit. Browse EInsurance to find the best lawyer’s insurance for your needs.