Professional liability insurance, also known as errors & omission (E&O) or malpractice insurance, is like a safety net for various industries. However, for legal professionals, it plays a crucial role. In simple terms, if a lawyer makes a mistake, forgets something, or causes financial loss to someone else, Attorney professional liability insurance steps in.
Imagine a lawyer’s action leads to financial trouble for another person or business. That’s where APL insurance comes to the rescue. But there’s more to it than just that. Let’s take a closer look at why attorney professional liability insurance is a must-have for your law firm.
Here’s the deal: if something goes wrong because of a lawyer’s actions, errors, or omissions, and it causes financial harm to someone else, this insurance has your back. It’s like a safety shield for your law firm. Now, let’s explore why this insurance is incredibly important for your legal practice.
Risks Do Law Firms Face
While there are shared risks in various industries, law firms encounter distinct challenges of their own. Let’s explore some of the most prevalent threats they typically face:
After going through data breaches, nearly 40% of small and mid-sized companies, including law firms, find themselves out of business in less than six months. The thing is, cyberattacks are increasing, and the bad guys behind them are getting smarter.
Now, here’s a big worry for law firms: keeping secret stuff secret. When there’s a data breach, personal info can get into the wrong hands, and fixing the mess can cost your firm a lot.
Technology is moving super fast, and it requires more IT experts to protect your digital files. Plus, using mobile tech in the office more makes the risk of a cyberattack even higher. That’s where attorney professional liability insurance comes in handy. It’s like a safety net for your law firm.
In the digital world, harmful stuff like viruses, malware, and ransomware can mess up your whole network. These troublemakers often sneak in unnoticed through downloads, hacked emails, or other online tools.
Now, here’s the scoop for law firms: because they have loads of important info, they are like magnets for cyber troublemakers. The most popular trick these cybercriminals use is phishing. They send emails that look harmless but are actually a big threat. Law firms, being treasure troves of valuable info, face sophisticated attacks that happen in multiple stages.
Imagine not being able to get into certain files that might not sound too bad, but these cyber baddies usually lock up files with secret stuff, making them impossible to access. These sneaky threats can stop a law firm’s progress faster than anything else in the biz. That’s where attorney professional liability insurance comes to the rescue. It’s like a safety net for your law firm.
Mergers or Professional Transitions
Depending on how big your law firm is, you might have joined up with another firm or had colleagues leave to team up with a different one. It’s a smart business move, but it can make your info more exposed for a bit.
When law firms merge, get acquired, or see colleagues leave, they have to share info. Without a strong cybersecurity setup, new or shared files could accidentally spill client details or other data.
Here’s another thing: each team member is like a link in your professional chain. If someone makes a mistake, it could cost your firm a lot. Mergers and team changes can be tricky because they involve lots of these links. That’s where attorney professional liability insurance comes in handy; it’s like a safety net for your law firm.
When the night falls, it’s a fact that lawyers are just like the rest of us. They can make mistakes. This truth has been around for a long time.
From downloading the wrong stuff to messing up data entry to saying something in a hurry on a rough day, humans make errors all the time. Some big lawsuits are based on these mistakes and claims of wrongdoing. Dealing with such a case can cost your law firm a lot in defense fees and harm your professional reputation for good. Apart from teaching your team how to avoid mistakes, it’s crucial to do what you can to protect your law firm. That’s where attorney professional liability insurance comes in handy; it’s like a safety net for your law firm.
Real-Life Claim Scenarios
Genzyme Malware Attacks:
- Resulted in over $117K in combined losses for the two firms.
- Initiated through simple phishing emails.
- Despite law enforcement dismantling the cybercrime network, the damage remains extensive.
Cybersecurity Challenges at Johnson & Bell:
- Poor cybersecurity led to malpractice allegations against a Midwest-based firm.
- No actual cyberattack occurred, but clients filed a class-action lawsuit citing numerous vulnerabilities in the online framework.
Legal Malpractice Allegations Against Gloria Allred:
- Well-known civil rights attorney accused of legal malpractice and negligent misrepresentation.
- The plaintiff, a former Southern Californian meteorologist, claims Allred created a conflict of interest by secretly negotiating a TV deal with CBS.
Lawyers’ Professional Liability Insurance
In the face of both familiar and new dangers, you work hard to safeguard your reputation, clients, and the future of your firm. Attorney professional liability insurance is a practical solution, stepping in to address issues related to professional service disputes and keeping your firm secure.
Attorney professional liability insurance is like a personalized protection plan for lawyers. It’s made just for legal pros like you, covering a bunch of risks that regular insurance might miss.
- Keeping information and networks secure
- Dealing with claims if you make a mistake causing financial trouble for someone else
- Covering the costs of defending against these claims.
In simple terms, this insurance is there when you need it. If a client decides to sue you for something related to your professional service, it helps with the money needed for defense.
Now, when insurance folks talk about “failure in professional services,” they mean things like:
- Giving bad advice
- Making a mistake
- Messing up on the administrative side
- Providing the wrong information
- Going against good faith
So, think of attorney professional liability insurance as your tailored safety net. It’s got your back when things get tricky in the legal world.
Attorney Professional Liability Insurance: Typical Exclusions
Just like other insurance plans, attorney professional liability insurance (LPL) isn’t a one-size-fits-all shield. It has its limits, and it’s good to know what situations it won’t cover.
Firstly, LPL won’t help if there’s fraud or intentional and criminal acts involved. It might sound obvious, but surprises aren’t usually welcome in the legal world, so it’s good to be clear about it.
Additionally, LPL doesn’t cover things like property damage or bodily injury. If government agencies slap fines and penalties, sorry, it’s not included. And when it comes to intellectual property, such as content or media, it’s generally not part of the deal in a lawyer’s professional liability policy. So, it’s good to be aware of these exclusions.
Attorney professional liability insurance: Coverage Enhancements
When it comes to boosting your attorney professional liability insurance (LPL) policy, many professionals think about adding extra protections. Here are some enhancements you might consider:
Firstly, there’s the “Broad Professional Services Definition.” This can make your policy more flexible by including a wide definition, like “any services performed for a fee.” Just make sure to check the exclusion section to avoid any surprises.
Next up is the “Automatic Additional Insured Status.” This one comes in handy when contracts demand adding the other party to your E&O policy. It gives additional insured status to anyone you have a professional services agreement with.
Then, there’s “Cyber” coverage. This protects you from issues like sharing harmful software, data breaches, and other computer-related problems. It also covers things like privacy breach notification costs and business interruption.
Another useful enhancement is “Payment of Withheld Fees.” If a client threatens to sue you for more than the owed fees, this enhancement lets the insurance carrier pay those fees on your client’s behalf. Of course, your client needs to confirm in writing that they won’t file a claim against you as long as you stop pursuing them for the fees.
Lastly, there’s “Loss of Documents” coverage. Sometimes, claims pop up due to damage to your documents or documents in your care. This enhancement covers the amount you legally have to pay, including the claimant’s expenses. So, these enhancements can add extra layers of protection to your attorney’s professional liability insurance.
Cost of Lawyers’ Professional Liability Insurance
Many small law firms often think they will pay the same insurance premiums as bigger firms. However, pinning down an exact cost for attorney professional liability insurance in one blog post is pretty tricky because it can vary a lot.
Even if your track record is spotless, every lawyer has their own set of risks. Insurance companies also look at other important things like:
- The type of law you practice
- Insurance limits
- How long you’ve had claims-made coverage
- Where your firm is located
- Your claims history
For smaller firms, the annual premium is usually between $1,200 and $2,500. Larger firms might be looking at $3,000 to $10,000. But remember, the final number depends on a bunch of factors. So, it’s a bit like putting together a puzzle to figure out the right cost for attorney professional liability insurance.