In the current legal climate, law firms face considerable risk from legal malpractice claims. Even if your firm is extremely diligent in your duty and obligations to clients and you enjoy great relationships with clients today, your firm could still face a stressful claim or costly litigation from an unhappy client in the future.
Legal Professional Liability Insurance can help protect your firm and minimize your risk, but many lawyers still have Professional Liability Insurance FAQs about why it’s needed, what it is and how it works.
Why Is Professional Liability Insurance Needed?
While some law firms may go decades without a problem, others won’t be as lucky. Human errors are easy to make and can be difficult to prevent, and even a small administrative error could lead to costly claim. Yet if your firm is extremely diligent in its work and has not made an error, it is still possible for a client to bring forth a claim.
- Claims are not uncommon, even for smaller firms. It is estimated that 4–17% of lawyers are sued each year, with 70% of reported claims made against firms with fewer than five attorneys.
- Claims that end in a judgement can be costly. By 2018, one survey found that most leading insurers had participated in at least one claim resulting a payout of $20 million or more. More recently, malpractice payouts of $150–250 million have been reported.
- The cost to defend against malpractice claims is also rising, with average cost of a defense ranging from $50,000 to more than $500,000. These costs don’t include any judgement or settlement costs.
What Claims Risks Do Law Firms Face?
According to the American Bar Association, these are some of the top claims risks faced by firms:
- Substantive law errors account for almost half (46%) of reported claims.
- Administrative errors account for 28.5% of reported claims, with a failure to file documents alone claiming 8.6% of all reported claims.
- Client relation errors, such as failure to follow instructions or obtain consent and poor communication with a client, account for 12.3% of reported claims.
What Is Legal Professional Liability Insurance?
Legal Professional Liability Insurance, also referred to as Errors & Omissions (E&O) Liability Insurance or Malpractice Insurance, covers the cost of certain legal fees, judgements or settlements that you may face as a result of claims and litigation brought against you based on the advice or services you provide. With Lockton Affinity’s Professional Liability Insurance, New York City Bar Association members receive coverage specifically designed for legal professionals and firms to ensure you receive the right coverage for the services you provide.
How Can Professional Liability Insurance Protect Your Firm?
With Professional Liability Insurance from Lockton Affinity, you can help protect your firm from the unexpected. Coverage from Lockton Affinity protects against risks associated with a broad range of professional services. The Professional Liability coverage available from Lockton Affinity offers many benefits, including:
- Financial Security: As a lawyer, you have firsthand knowledge of the cost of a legal defense. Legal fees from just one claim can amount to more than a lifetime of insurance premiums and even threaten the future of your firm. Professional Liability coverage protects the financial wellbeing of your firm.
- Additional Benefits: Many policies are available with protection and coverage for needs such as pre-claim mitigation, defense income reimbursement for trial attendance, crisis management expenses and more. Some policies may also include free CLE and risk management credits.
- Peace of Mind: A claim can cause an enormous amount of stress, harm the professional reputation of your firm and threaten your financial security, even given that most claims are filed when no mistake was made. Professional Liability Insurance covers you regardless of whether there was an error.
Why Choose Lockton Affinity?
Our goal at Lockton Affinity is to ensure that you receive insurance and service that stands out above the rest. While other industry groups and associations offer Professional Liability Insurance policies with shared aggregate limits, Lockton Affinity offers coverage with individual limits, so that you will always have access to your full policy limits.
Plus, getting the coverage you need is quick and easy. Your Lockton Affinity Professional Liability policy will take effect 12 a.m. local time the day following purchase.