What is Legal Malpractice Insurance?
Legal malpractice insurance is designed to protect attorneys from lawsuits against them or their firms based on that attorney’s negligent and/or willful misrepresentation of their client. Where medical malpractice is the most well known of professional malpractice, legal malpractice is just as prevalent and has far reaching consequences associated with it. For this reason it is beneficial for an attorney to carry legal malpractice insurance.
Do states require attorney’s to possess Legal Malpractice Insurance?
As of today the only State in the Union that requires mandatory legal malpractice insurance is Oregon. As of 2009 the average cost of that insurance was $1,800 per year. Even though it is not mandatory many States, twenty-eight (28) as of 2011, require an attorney to disclose to his/her client that attorney’s possession, or lack thereof, satisfactory legal malpractice insurance.
If it is not required, why would I want Legal Malpractice Insurance?
As stated in the previous paragraph, it is the law in many States that an attorney must make known to his/her prospective client of their possession, or lack of, legal malpractice insurance. Because of this it law a selling point in whether or not a client will seek representation is whether an attorney possesses legal malpractice insurance. If a prospective client notices a lack of insurance it can often signal, to that client, that they are taking a risk by having that attorney represent them or, even worse, that the attorney is not thorough conducting his/her practice.
Legal malpractice insurance is also beneficial for the obvious reason, the financial damage resulting from a negative result in a malpractice lawsuit. From the newly barred attorney to the thirty (30) year veteran who is set in his ways, any and all attorneys are, in essence, human and prone to make mistakes from time to time. Often these mistakes are minor and have little to no bearing on a matter or they are discovered quickly through examination by the attorney or others in the firm. However, all it takes is one major mistake to cause an entire practice to fall apart if an attorney lacks legal malpractice insurance.
What are the costs of Legal Malpractice Insurance?
Just as in the medical profession, the rates that attorney’s are subject to vary from State to State and the area of practice. The average cost of legal malpractice insurance can range from $5,000 to $8,000 with members of the bar who focus primarily on divorce, real-estate, and personal injury subject to rates at the higher end of the spectrum.
The doctrine of Respondeat Superior basically states that employers can be held liable for the actions of their employers. This applies to lawyers and their firms as well. If a paralegal or legal assistant neglects to file on time, or record important information, it can be imputed on the attorney (employer) or the firm.