Legal Malpractice Insurance: The Basics, Benefits, Examples

Legal Malpractice Insurance: The American Bar Association defines legal malpractice as, “any act which is wrongfully executed by a legal attorney.

Raju Choudhary

Legal Malpractice Insurance

Legal Malpractice Insurance: The American Bar Association defines legal malpractice as, “any act which is wrongfully executed by a legal attorney that causes monetary damages to his or her client. Legal malpractice can occur in any domain of law.”

Legal Malpractice Insurance: The Basics

You might be the most dedicated and diligent attorney, but at some juncture, in your career, an unhappy client may wrongly (or rightly) charge you with legal malpractice. It is a risk faced by all attorneys. Even if the charges are baseless, it can take a lot of time and money to deal with such claims. It is for protection against such a risk, that many attorneys acquire legal malpractice insurance. By law, an attorney is not compelled to take attorney malpractice insurance. Although jurisdictions differ on whether all attorneys should have malpractice insurance, it just seems like a common sense thing to do.

Examples of Legal Malpractice Claims

An attorney may face a legal malpractice suit in the following circumstances:

  • Failing to follow a case appropriately
  • Failing to arrange for witnesses or experts
  • Dismissing a case due to attorney negligence
  • Failing to act before the calendar deadline or statute of limitations
  • Any negligence caused by the attorney that leads to loss for the client

Benefits of Buying Malpractice Insurance

When you obtain malpractice insurance, it provides you with the following guards:


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  • Protection from accusations of professional negligence
  • Protection from associates and staff
  • Provides mental peace so that you may focus on your legal practice
  • Provides your legal practice a means to outsource risk management
  • Enables client confidence in your abilities and legitimizes your practice
  • Helps fulfill your professional obligations
  • May cover the expenses of obtaining independent legal representation in case of any complaints

Areas of Legal Practice That are Riskier than Others

There are a few areas of legal practice that may benefit more from obtaining legal malpractice insurance than others. These are transactions entailing the following:

  • Intellectual property
  • Securities
  • Plaintiff’s personal injury case
  • Loan modifications
  • Estates and trusts.

In the arena of intellectual property, patent work is considered high risk practice. However with the insurance application, you can consider the time you will need to devote to the patent work, the risk management steps and level of expertise in place.

In the domain of estates and trusts, there is more risk at stake particularly under non-client beneficiaries who have the right to pursue a malpractice suit. In the plaintiff’s personal injury cases, the gamble occurs when the attorney is unable to deal with clients who have an unreasonable expectation about their case or if the attorney cannot properly mark deadlines. In loan modifications, the attorney faces a high clientele volume and government regulations, making it a high-risk undertaking. get in touch with experts like Keis George for more help

Why Might You Require Legal Malpractice Insurance?

As you are aware, you are not legally required to obtain legal malpractice coverage. However, having this liability insurance provides you with the following protections:

Covers Defense Expenses

You might be the most confident attorney, however, diligence and talent are not sufficient protection against malpractice suits. A disgruntled client can charge you with a case whether it’s your fault or not, leading to hefty legal defense costs. These can mount up quickly. UP to 6% of all private practice attorneys face malpractice suits each year. With malpractice coverage, your legal expenses are covered whether or not the legal charges are justified.

Client Requirement/Expectation

Clients use high-tech methods to obtain legal representation. They are aware that clients can sue their lawyers for malpractice and recover only a percentage of their losses due to a lack of firm resources. As a result, many clients require and even expect their lawyers to have errors and omission insurance or EandR. They feel confident that in case of performance failure or negligence, their attorney has coverage. Without this coverage, you’re at risk of losing such clients.

Mistakes Will Occur

Irrespective of how skilled and experienced you are, mistakes can occur at any time. Clients won’t hesitate to sue you in order to recover their losses. Do not gamble with insurance. Seek coverage for all your legal steps if you do make a mistake that affects your client’s outcome. The expense of you having to defend yourself in a malpractice suit can cause irreparable damage to your law firm. Having malpractice insurance is a cost-effective and smart way to have financial security against any possible legal action that might be taken against you.

What is Covered by Malpractice Insurance?

The following is a list of types of coverage in malpractice insurance:

Claims-Made Coverage

This type of coverage protects you in the event of action brought against your practice during the policy period, irrespective of when the malpractice happened.

Pre-Claim Assistance Coverage

This covers the expenses with a possible legal suit. It can help you manage risks when a case goes heads in the wrong direction and the client seems to hold you accountable for their financial damages.

Worldwide Coverage

There is a lot of travel involved in the legal world. With this coverage, you have protection from actions resulting in omissions or mistakes that occur when providing legal services anywhere in the world.

Loss of Earnings

This coverage reimburses you for any lost income while your claim is being resolved. Coverage limits range from $500 per day up to $15,000 per year. The amount will vary according to your insurance carrier.

Pro Bono

This coverage offers protection for legal services that you provide free of charge. You’re still however at risk for being charged for malpractice.

Enhanced Settlement Coverage

In case you discard a settlement opportunity and the clients thinks you’re responsible for higher costs, this coverage will soften that blow. The insurer will cover up to 50% of that settlement amount.

Crisis Expense Coverage

In this type of coverage, costs resulting from crisis management are sheltered. Examples include hiring a marketing or public relations company due to a mistake that harms your client’s reputation.

These are a few types of coverage that you can seek with legal malpractice insurance. Having this liability coverage is not just protection for yourself and your firm but also for your reputation.


Raju Choudhary

Article by Raju Choudhary Raju has written 810 articles. If you like This post, you can follow CAknowledge on Twitter. Subscribe to CAknowledge feed via RSS or EMAIL to receive instant updates.


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