Lawyers: Protect Yourself With Professional Liability Insurance

liability insurance

The new U.S. economy has created more lawyers professional liability insurance exposures than would be commonly assumed.

According to the Bureau of Labor Statistics, more than 25,000 legal services jobs have been lost since August of 2008.  A displacement of this magnitude has created an employment ripple throughout the legal industry, felt from the largest international firms down to small-town practices.

When insurance carriers are underwriting a lawyers professional liability insurance policy, recent hiring and firing of lawyers is taken into account. A law firm may let a lawyer go for many different reasons, but the actions leading up to release can potentially lead to professional liability insurance exposures.

The new U.S. economy hasn’t only affected employment.  With revenue falling across industry practices, competition between law firms has become very aggressive.  Law firms are starting to take on new practices in which they have little to no expertise, in an effort to increase revenue.  Organizational inexperience within a law firm can lead to mishandled and/or misfiled paperwork, which is a leading concern in cases involving lawyers professional liability insurance.

Technology has also played a role in the recent spike of professional liability claims.  Law firms have taken to the Internet to market their business.  Electronic communication , filing, mobile technology and social media advertising have all generated a another new form of liability, cyber liability.

Lawyers Professional Liability Insurance

What Can Law Firms Do To Protect Themselves?

Be prudent when purchasing lawyers professional liability insurance coverage.  Cheaper is NOT better when it comes to procuring professional liability for a law firm.  The exposures that law firms face are vast, and the language within legal industry insurance contracts can often be vague.

Make sure you work with an insurance professional with experience in both the legal industry and in writing professional liability insurance.  Additionally, be upfront and honest with everything that your firm does. Things you must disclose to your insurance professional are:

  • All law practice lines (including pro-bono).
  • Communication methods.
  • Advertisements.
  • Data storage.
  • Publishing (written articles for magazines, online content, newsletters).
  • Employment practices.

The worst thing that you could do when purchasing lawyers professional liability insurance is withhold activities for the sake of saving money on insurance premiums. In many cases, additional activities of law practices do not come with an increase in premium but the addition of policy forms to cover the risk.

So, by opening up and properly disclosing all activities within the law firm, the result is many times more coverage, not more cost.

The Insurance Take-Away

Lawyers beware, professional liability insurance claims can arise from any action in which you act in a professional capacity.

How often do lawyers act in a professional capacity?  I’d say it’s pretty much what they do all day long. Every phone call taken, every document processed, every piece of advice given can lead to a lawyers professional liability insurance claim.

The increase in lawsuits associated with the depressed U.S. Economy expands the professional risk lawyers take on two fronts: More work for less lawyers and higher propensity of clients to sue their lawyer.

The first line of defense for all law firms is lawyers professional liability insurance, a coverage that should not be taken lightly.

Liability Photo via Shutterstock

2 Comments ▼

Ryan Hanley


Ryan Hanley Feel free to connect with Ryan on his website Content Warfare - Win the Battle for Attention Online. Or see him in action at his Albany Insurance blog for The Murray Group.

2 Reactions

  1. Shawn Hessinger

    Hi Ryan,
    All businesses must work to protect themselves these days. Thanks for the overview. Fantastic look at what’s involved and what you should watch out for, no matter what business you’re in.

  2. Interesting perspective regarding the dislocation in the legal employment market. One implication is that people need to be really diligent about making sure that they maintain continuity of coverage.

    Because legal liability claims can arise years after the work is done, a lawyer has continued exposure and it’s important to find out whether the firm will be responsible for covering that work or whether it will fall to the attorney and it’s important to know that the firm has maintained that coverage, especially with firms going out of business. So even lawyers leaving the profession entirely should look into some sort of “tail” coverage.

    And of course, lawyers should shop their policy annually in an ideal world, but as a minimum when their situation changes or when they get a big bump in the cost of their premium.

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