In the U.S., approximately 6% of all attorneys are likely to face an allegation of professional liability on an annual basis. Claims activity against attorneys has seen a steady increase in each of the past two decades, and there is no likelihood that this pattern will end any time soon.
Dealing with a professional liability claim can be expensive, which is why they need to carry attorney liability insurance. Even if ultimately cleared, the money spent on defense (not to mention the hours of time devoted to addressing the claim as well as the anxiety it may bring about), can be a very costly proposition.
Professional liability insurance helps to ease that burden by assuming much of the responsibility for responding to, and in the defense of, any claim. Coverage can also help protect against significant losses by helping attorneys meet their obligations to protect a clients’ interests, even during the worst of circumstances.
Some common causes of professional liability claims
Probably the most frequent claims brought against lawyers are those alleging simple mistakes, which include administrative errors or substantive errors of law. Claims suggesting that the lawyer completely and improperly abandoned a representation or entirely failed to address the client’s needs in any way are also quite common.
Increasingly, lawyers face suits in which the primary or sole allegation is one of breach of fiduciary duty, often because of a conflict of interest, and frequently based in duties arising through implication. Claims are also made as a result of fees suits brought against clients, along with claims brought by non-clients.
Risks typically covered by lawyers’ professional liability insurance
Legal malpractice policies are usually designed to provide coverage for claims that arise from “wrongful acts” committed in the rendering of legal services (sometimes called “professional services”) in the capacity as a lawyer and generally provide both indemnification coverage and claims expense coverage, subject to specified deductibles and endorsements.
Covered acts usually also include those committed in a variety of ancillary services regularly provided by lawyers, such as:
- Services as a notary public
- Services as a title agent and or title agency
- Acting as a trustee or executor of an estate in connection with representation of a client, or
- Acting as an officer, director, or member of a legal professional association
Broader coverage often can be added through amendment of various endorsements depending upon the lawyer’s circumstances and the carrier’s interest and capacity. Speak to an agent about concerns regarding attorney liability insurance today.