LAWYERS INSURANCE

Lawyers take on roles that expose them to risk, including family office roles, guardian ad litem assignments, mediation, corporate mergers and acquisitions, and compliance officer duties. Errors, omissions, negligence, accidental release of client information, and destruction or fabrication of critical records are all potential exposures your practice faces. Insurance plays a major role in protecting your career, your firm, and your assets. Here are the top liability and property insurance policies lawyers need to consider.

Liability Insurance for Attorneys

The list of liability risks seems to grow each year, but the primary ones focus on malpractice (or errors and omissions). Allegations can include:

• Failing to file on time

• Mistakes on filings or other legal documents

• Undisclosed conflicts of interest

• Loss of or failure to preserve evidence

• Fiduciary breaches in handling trust accounts or escrow

• Negligence concerning client instructions

• Missed appearances leading to client losses

• Bad legal advice

• Failure to catch compliance errors

Lawyers professional liability insurance can protect individual attorneys, law firms, and contract lawyers. For in-house counsel, employed lawyers professional liability insurance can be helpful since you could be sued by your parent organization or its employees. This coverage can be written to cover moonlighting activities, both paid and pro bono. It can also be written to insure legal assistants, contract attorneys, and legal support staff.

Note that professional liability insurance, also called lawyers E&O, typically does not cover disciplinary investigations, such as bar complaints. For that protection, you would likely need disciplinary coverage, which can be added to an E&O insurance policy for lawyers. This endorsement will help with your defense costs but not any penalties.

You may also wish to ask your insurance agent about tail coverage. This is a provision in a lawyers professional liability policy that extends the reporting period for a malpractice claim into the time after you leave a practice or retire altogether. It is important because you could be sued for actions you took (or didn’t take) while you were actively in practice. If your malpractice policy from that time frame is no longer in effect, your legal bills and any compensation required of you would have no insurance support. A tail coverage, or extended reporting period, enhancement to your policy would be needed for such protection.

In a similar vein, make sure that the liability policy provides coverage for prior acts in case a claim arises from legal work that occurred before you took out the policy. Also, be sure to review the policy to see if it contains a “hammer clause,” which means the insurance company can decide when to settle a case. This can be frustrating when a law firm believes it provided the client with competent work but the insurance company concludes that the cost of legal defense exceeds the value of settling.

If you have employees, you should also consider employment practices liability insurance (EPLI). It helps with legal fees, settlements and judgments if an employee files a claim over workplace hostility, harassment, discrimination or wrongful hiring or firing. In the competitive world of law, these kinds of allegations are not unusual, and complaints can escalate into lawsuits and regulatory investigations, draining your resources. EPLI may be written to cover regulatory investigation costs, though it won’t cover penalties if you are found guilty of an Equal Opportunity Employment Act violation.

Law firms and any attorney who has clients visit an office should have general liability insurance. It is a basic policy that helps pay for costs associated with an injury to a visitor on your work premises. It may also step in if you or a covered employee damages the property of another or injures a client by, for example, spilling a drink on their computer or accidentally tripping them.

Non-owned auto insurance may also be needed to protect yourself or your practice from liability associated with accidents involving the use of an employee’s personal vehicle during the course of business, such as going to the courthouse or to a client meeting away from your premises. A personal auto insurance policy usually excludes business use from coverage. Talk to your insurance agent about the nuances, because non-owned auto insurance typically doesn’t cover damage to the driven vehicle or injury to the driver, only damage and injury to others.

If you think the dollar limits of coverage on a liability policy are too low, you may wish to get excess liability insurance or umbrella insurance for lawyers. For example, an excess liability policy could add millions in coverage limits to a lawyers professional liability policy or a cyber liability insurance policy. Commercial umbrella insurance is available to expand the dollar amount of coverage for multiple policies at once. 

Property Insurance for Attorneys

Property insurance that sufficiently protects the value of your office, your office contents and your valuable papers is a basic need for all lawyers and law firms. If you are leasing your space, your landlord will insure the building, but you need to cover any betterments you make to your offices. Your building contents include your fixtures, furniture, equipment, and paper files. 

Paper files need special attention when you secure an insurance policy because standard coverage in a commercial property policy for lawyers is fairly low. If you still have cabinets full of old (or current) cases that haven’t been scanned or otherwise loaded onto the cloud, you could lose crucial records in a disaster, and it could cost tens of thousands of dollars to go through public, corporate, or banking institutions to restore them. It is possible to add or enhance coverage for valuable papers, which can include printed manuscripts, loan agreements, client or other invoices and payments, and employee records, among other written or printed files.

A protection protocol should be followed to guard all paper resources even if you have insurance. That includes some kind of check-out/check-in log and maintaining a fireproof, theft-deterrent, disaster-resistant storage unit. 

If you or any of your firm’s employees operate from a home office or you store any client files there, talk to your insurance agent about protection for home-based assets. Standard home insurance will not usually cover business losses, and commercial property insurance may need to be tweaked to cover items taken home or stored there.