Malpractice Claims and Lawyer Professional Liability Insurance


Lawyer professional liability insurance
Lawyer professional liability insurance

In the past few years the legal landscape has undergone some serious changes. Several very prestigious law firms have gone out of business, mainly caused by costly errors and omissions that ultimately led to their demise. Lawyers have lost their jobs, revenues are down, and in some instances growth has become stagnant. Part of the survival process is through proper insurance coverage. To offset the costs of any litigation aimed at a firm, or any of their partners, successful organizations depend on lawyer professional liability (LPL) insurance as a means to repairing any damages resulting from litigation and huge settlements brought against their firms.


Claims of malpractice can vary and have devastating consequences


Of all the malpractice errors that lawyers can commit, one of the most common is a failure to know or apply substantive law. However, that particular error does not account for the majority of legal malpractice claims. In fact, no one single error accounts for the majority of claims, although as a general category, the substantive-related kind are often responsible for falling on the wrong side of the malpractice line.


Administrative errors, client relations errors and intentional wrongs are among some of the main causes of client mistrust, and furthermore, can lead to acts of litigation citing any one of these wrongdoings. Understanding where and why claims happen can help an agency proactively take steps to reduce the likelihood that a claim will be made against the firm or one of its practitioners. To accomplish this it will be helpful to understand where information on malpractice claims comes from.


When grouped together, substantive-type errors account for over 46 percent of reported claims in the LPL studies. Another rather obvious error is the failure to know or ascertain a deadline (as in a limitation period). Additional substantive-type errors include:


  • Planning errors regarding choice of procedure


  • Errors in public record searches


  • Failures to anticipate tax consequences, and


  • Inadequate investigation or discovery of fact


Lawyers should tread carefully when giving advice or working on matters relating to law for a state where they are not admitted. Another critical issue is giving legal advice tailored to a client’s specific circumstances, where a lawyer might not take the extra time needed to dig deeper and ask appropriate questions on the matter. Clerical and delegation errors include simple clerical errors (e.g., filing a document in the wrong file), errors in mathematical calculations and work delegated to an employee that is not thoroughly checked. Whatever the cause, lawyer professional liability insurance can prevent a firm from losing everything.