Legal malpractice insurance also referred to as professional liability insurance for attorneys and lawyers, is a specialized insurance policy designed to protect lawyers against malpractice lawsuits. Legal malpractice is technically defined as a wrongful act or negligence that causes damages to their client. Malpractice can occur in any practice area and can damage not only the lawyer’s reputation, but also their business. Studies have shown that approximately 25% of malpractice cases are composed of personal injury cases of the 35,000 that are reported each year. If you are a licensed attorney in any state, it is important to build a comprehensive insurance portfolio that includes commercial property insurance, general liability insurance, and professional liability insurance.
Legal malpractice insurance can be used in a number of different scenarios in a legal case. The most common type of claim filed against a legal malpractice professional liability policy is because an attorney fails to pursue a case and the case is dismissed in the court of law. Attorneys failing to meet deadlines and secure witnesses and evidence as reasonably expected are also grounds for a negligence or faulty performance lawsuit. An attorney is supposed to have the best interest of their client in mind. If they choose to settle a case and harm the client in doing so, a very large civil lawsuit could be filed against the attorney or the law firm.
In a legal malpractice case, the victim holds the burden on proof to receive financial compensation. The client must prove the lawyer-client relationship, the damages that were caused by the lawyer, and how these damages were caused by legal malpractice. If each of these things is proven in the court of law, the attorney could face severe judgments that could affect both their personal and business assets.
While legal professionals practicing in any area of law are not required to carry legal malpractice insurance, choosing to do so could greatly affect the outcome of a malpractice lawsuit or claim. Rather than going through the ins and outs of a lawsuit, the insurer providing legal malpractice insurance will generally negotiate a settlement for the attorney. Because the insurer is the one paying the final settlement or judgment, they will designate a qualified attorney for defense if the case goes to trial. Not only will the attorney not have to pay for legal defense out of pocket, the insurance company will pay the money allocated to the victim.
If you are a legal professional, it is important to do research on what type of insurance coverage you should carry. Studies have shown that only 60% of lawyers today carry legal malpractice insurance. Do not leave yourself vulnerable to damaging malpractice claims and purchase professional liability insurance for lawyers.