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The Value of a Peaceful Mind
According to the American Bar Association, four out of five lawyers will be sued for malpractice at some point in their career. Furthermore, this isn’t reserved for just large practices. Nearly seventy percent of those claims include firms with less than five attorneys on staff.
These startling statistics uncover a major truth that every member of the legal community needs to understand—there’s a real risk that your firm could be the target of an unscrupulous suit sometime in the future. This also means that now is the best time to protect yourself from possibly having to pay thousands of dollars later due to a judgment, defense costs, or other binding decision.
Thankfully, having professional liability insurance is a great way to protect your law practice while enjoying a few additional benefits. Here’s what you need to know about professional liability insurance for lawyers.
CONTACT USWhat is Professional Liability Insurance for Lawyers?
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What is a Good Reason to Invest in a Professional Liability Policy for Your Law Firm?
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Are Lawyers Required to Carry Professional Liability Insurance?
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How Do I Utilize Professional Liability Insurance to Protect My Assets?
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How Does Professional Liability Insurance Help You Protect and Defend Your Professional License?
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Are There Any Other Situations Where I Might Need Professional Liability Insurance as a Lawyer?
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WHAT IS PROFESSIONAL LIABILITY INSURANCE?
Simply put, professional liability insurance is a protection mechanism designed to help out in case the need arises. For small firms, this often means the difference between handling a loss out of court or the need to spend several thousand dollars dealing with the issue in litigation.
WHAT SPECIFICALLY DOES IT COVER?
Professional liability insurance protects lawyers and law firms from bearing the full cost of potential claims made against them while performing legal services. In addition, this type of policy protects a solo attorney or small law firm from losing assets, paying high legal fees, and potential business failure in the event of frivolous lawsuits, disgruntled clients, or charges of professional negligence.
WHAT IS A GOOD REASON TO INVEST IN A PROFESSIONAL LIABILITY POLICY FOR YOUR LAW FIRM?
It seems reasonable to believe that if a lawyer is good at what they do, they won’t have to worry about being sued.
But the reality is that many of these lawsuits are not the result of a mistake by the lawyer but are instead frivolous in nature. Protecting yourself against mistakes and nuisance claims are reason enough to invest in a professional liability policy.
However, there are plenty of other reasons to purchase malpractice coverage. Peace of mind is another reason why so many lawyers opt to carry professional liability insurance.
When you know you are always protected, you don’t have to spend sleepless nights wondering if an accidental misinterpretation or action is going to cost you everything you’ve worked so hard to build. Your legal career is your life and without a policy to protect it, you’re putting the whole thing at great risk.
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ARE LAWYERS REQUIRED TO CARRY PROFESSIONAL LIABILITY INSURANCE?
A few jurisdictions require lawyers to carry professional liability insurance, while others do not.
However, having professional liability insurance as an lawyer is almost always a great idea even if it isn’t explicitly required. Outside of the protection a policy provides, most lawyers want their clients to feel secure in knowing that they are doing everything in their power to provide excellent service. Legal clients are placing a lot of trust in the counsel they select and having adequate liability coverage only strengthens that feeling of comfort with current and future clients.
Some states require that law firms report their yearly insurance status, while other areas have laws that require firms to inform their clients if they do not carry insurance. This is why it is really important to understand the requirements of your area and determine where you fit into these guidelines.
HOW DO I UTILIZE PROFESSIONAL LIABILITY INSURANCE TO PROTECT MY ASSETS?
It doesn’t matter if your law practice is established or just starting out, it is really important to ensure you are covered. Professional liability insurance not only protects the assets of the firm, but also the assets of the individual lawyer. A policy can protect you from paying high legal fees, losing assets, and potential business failure.
If you work for a law firm, it is important to discuss the type of professional liability coverage your employer offers to individual lawyers. If you are already on your own, it is important to discuss your situation with your insurance agent.
Professional liability carriers typically provide more than just assistance in the event of a claim. Many also provide resources to help protect lawyers avoid claims in the first place.
Risk management resources, such as sample engagement letters and a 24/7 claims hotline, are typically available to insureds to help address situations when they happen instead of after a claimant is threatening further action.
There are also many extensions that are built into policies that protect firms from much more than just lawsuits. For example, most policies have a provision to defend against bar complaints, as well as provide subpoena assistance. It’s these additional perks that make investing in a professional liability policy for your law practice such a wise decision.
ARE THERE ANY OTHER SITUATIONS WHERE I MIGHT NEED PROFESSIONAL LIABILITY INSURANCE AS A LAWYER?
Without professional liability insurance, lawyers may find it difficult to conduct business with other organizations. Whether working with a lender or a referral service, it’s likely a firm will run into organizations that require proof of insurance.
Other businesses may even require a specific amount of coverage in order to conduct business or provide services. This is especially true if you intend to represent large corporations or those with other major business interests. By the same token, many law firms won’t refer a client to another firm unless they receive proof of insurance due to potential exposure to claims risk. Thus, it is important to make sure you have a policy in place before the situation arises.
While the cost of a professional liability policy for your law firm might not be viewed as cheap, it is still much less expensive than having to deal with a claim on your own. Contact us today to learn more about your options and how we can help you with all your business insurance needs.