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Lawyers and Legal Malpractice: Three Things to Know About Insurance

If you are starting your own law firm then you probably already have a lot of experience with handling clients, representing their best interests, and understanding how a law firm generally functions. What you may not know a lot about, however, is how legal malpractice insurance works. For lawyers, legal malpractice claims can end up being extremely costly, to the point that a single claim could easily ruin a small law firm that is just starting out. Malpractice insurance helps protect you and your law firm in the event that you are sued for alleged malpractice. Here are three important things to keep in mind about legal malpractice insurance.

1. Malpractice insurance is not required

You may have heard that law firms are not obligated to carry legal malpractice insurance. Rather, those who do carry such insurance are merely required to report that fact to their state bar association. While it is true that legal malpractice insurance is not technically required, it is important to keep in mind that legal malpractice claims are fairly common, with five to six percent of private attorneys being sued for malpractice each year. Chances are that if your firm is around long enough then at least one disgruntled client will decide he or she has a claim against you (regardless of whether or not that claim has merits).

2. Coverage limits will vary

Not all law firms are the same, which is why not all legal malpractice insurance policies are the same. You want an insurance policy that is going to be able to cover the potential costs of a malpractice claim against your firm. If you are representing large corporations in patent infringement cases, for example, then a malpractice claim against you could easily run into the hundreds of thousands if not millions of dollars. In that case, you will want a very high coverage limit. If, however, you deal primarily with middle class clients in family law cases then you can probably opt for lower coverage limits.

3. Know the exclusions

First of all, no malpractice insurance policy will cover any illegal acts you engage in. Legal malpractice insurance is designed to protect you in case you make an error that subsequently exposes you to liability. Additionally, you will want to be aware of the gaps in coverage. Many insurance policies will only cover specific types of claims depending on the type of work you typically do. For example, if your law firm deals primarily in employment law, then that one personal injury case you took on the side may not be covered by your insurer. Check the terms of your policy closely and see if there are options for bridging any gaps that could ultimately leave you exposed.

Even the best of lawyers make mistakes sometimes, whether it’s missing a meeting with a client or forgetting to file important paperwork by the appropriate deadline. While in many cases these errors are easily fixable, in others they could significantly damage your clients case and could expose you to a legal malpractice lawsuit. Because the risk of a malpractice lawsuit is so high, you do not want to be caught off guard if and when one happens to you. As the above article shows, having malpractice insurance could protect you and your firm from a potentially devastating malpractice lawsuit.


This article contains general legal information but does not constitute professional legal advice for your particular situation. The Law Dictionary is not a law firm, and this page does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.