| Need for legal malpractice insurance today | | | | involved in the profession. For example, if a lawyer/ |
| There are about a million lawyers in USA. The lawyers | | | | law firms are into banking or real estate, the cost may |
| in USA are on growth. Many number of law graduates | | | | be quite higher than a regular cost of a policy. |
| passes out every year and joins a law firms. The | | | | Most professional liability policies are written on a |
| client case always cannot be won. There will be | | | | "claims-made" (i.e. coverage will apply to a claim made |
| verdicts in favor or against a client. Negligence on the | | | | against the insured within the coverage period provided |
| part of the lawyer will also contribute towards the | | | | by the policy regardless of when the injury occurred) |
| losing of case. | | | | basis, though sometimes coverage is available on an |
| A legal malpractice case is set back towards the | | | | "occurrence" basis. |
| growth of the law firms if there is no effective legal | | | | There are also coverage like Tail Coverage which is |
| malpractice insurance for the firm. | | | | runs for a specific number of years that coverage will |
| Legal malpractice is defined as any negligent or | | | | exist when a law firm cancels its insurance policy or |
| wrongful act committed by an attorney that causes | | | | dissolves. Coverage also will continue for a lawyer |
| damages to his or her client. | | | | who retires or leaves private practice to become a |
| There are many types of insurance available today. | | | | teacher or assume a judgeship |
| Legal malpractice insurance which comes under the | | | | There are also Specific Coverage a specific area of |
| professional liability insurance refers to an insurance | | | | law that is high risk, such as securities, banking, |
| provided by the third party towards the claim of a | | | | personal injury and real estate, may have higher |
| client against an attorney. If the clients sues an | | | | insurance premiums and coverage limitations that may |
| attorney for legal malpractice, although attorney is liable | | | | apply. Some policies may not cover some forms of |
| for the amount claimed the Legal Malpractice | | | | legal malpractice such as fraud theft or willful injury. |
| Company/ firm pays the amount. Hence there would | | | | Deductibles: A deductible applies to a professional |
| be no burden on the lawyer paying the huge amount. | | | | liability policy just like any other type of insurance policy |
| According to the statistics, every 5 out of 100 | | | | that is issued. A deductible typically applies to loss and |
| attorneys in USA are facing legal malpractice cases. | | | | defense costs. A higher deductible may be required by |
| More than 35,000 cases are filed annually on the | | | | an insurer for high risk individuals. A high deductible also |
| alleged legal malpractice of attorneys. 25% of the legal | | | | can be used by the insured to lower the cost of the |
| malpractice cases are related to personal injury, 23% | | | | policy. Deductibles can apply per policy claim or paid on |
| are related to real estate, 11% is related to Bankruptcy | | | | an annual basis. |
| and collections and the 8 % is related to family law. As | | | | Coverage Agreement and Exclusions: Individuals who |
| a general rule, legal professionals are not required to | | | | purchase a professional liability insurance policy should |
| obtain legal malpractice insurance. Only 60% of | | | | always read the coverage agreement and review the |
| attorneys in USA have legal malpractice insurance[1] | | | | policy's exclusions. The coverage agreement provides |
| Legal malpractice insurance available to lawyers and | | | | details about the coverage and any additional people |
| law firms may be classified into many such as: | | | | covered by the policy. The exclusions on a policy are |
| Individual, Small, Medium, large Law Firms and medical | | | | acts by the insured that are not covered by the policy |
| malpractice insurance for employed lawyers. | | | | or are covered by another type or kind of insurance. |
| Individual lawyers availing legal malpractice insurance is | | | | Even more important is the question of whether claims |
| lesser today. And the legal malpractice insurance | | | | expenses are including within the limits of liability or |
| offered to small law firms are lesser. | | | | whether they are payable in addition to the limits of |
| Working in a legal department of a non- legal | | | | liability. Even when claims expenses are payable |
| corporation does not make the lawyer immune from | | | | outside the limits of liability, some carriers provide a |
| claim, legal malpractice case on the lawyers employed | | | | specific, separate limit for defense (usually equal to the |
| in corporations also increasing.It is also mandatory | | | | limit for damages), while some carriers are silent on the |
| under certain law to disclose about the professional | | | | issue, which – theoretically, at least – means that |
| liability insurance with the client. E. G. In California, Rule | | | | claims expenses are unlimited. |
| 3-410 of the Rules of professional Conduct which is | | | | There is also an issue about coverage of lateral hires. |
| effective from January 1, 2010, It is mandatory on the | | | | Many insurance carriers will customarily cover the |
| part of an attorney to inform about the professional | | | | attorney from the date of hire, on the assumption that |
| liability insurance in writing to the client at the time of | | | | the former firm's policy will respond to claims arising |
| clients engagement.[2] Most state or county bar | | | | from the time that the attorney was employed by or a |
| association lawyer referral programs require their | | | | member of that firm. It is really difficult to find out |
| member attorneys to be insured | | | | whether particular attorney or law firm carries Legal |
| In many states, counties and cities, bar association | | | | malpractice insurance as the many state law does not |
| "endorsed" insurance programs are aggressively | | | | make it mandatory to disclose it to the client. However, |
| marketed. | | | | it is good on the part of the client to get such |
| While defending legal malpractice claims, attorneys not | | | | information from an attorney. |
| only lose money but also valuable time. The average | | | | In many countries insurance companies offer |
| figure may vary from 250 to 300 hours per case that | | | | professional liability insurance to doctors, engineers, |
| can be billed. This insurance protects a lawyer for | | | | lawyers, web developers, accountants, architects, real |
| each lawsuit he has to face. | | | | estate brokers, appraisers, and website developers . In |
| Thus, attorney malpractice insurance becomes | | | | India, although we see few companies offering medical |
| necessary. In many of the legal malpractice claims, | | | | malpractice insurance to doctors, there are no law |
| insurance company negotiates with the victims and | | | | concerning filing of a legal malpractice case against the |
| offers the compensation. In most of cases, insurance | | | | lawyers and there is no legal malpractice insurance |
| company designates a law firm for the representation | | | | available to lawyers. In India, if lawyers commit a |
| of the defendant. | | | | breach of his fiduciary duty, there is state bar council |
| Since the legal malpractice cases are on growth, there | | | | to take action against the Lawyers including |
| are many law firms in USA exclusively offering their | | | | suspension and removal from the name of the lawyer |
| service on Legal malpractice cases.The cost of a | | | | from state bar council. |
| policy is directly influenced by the degree of risk | | | | |