Professional liability insurance provides coverage to people and businesses that work with clients. For law firms and self-employed lawyers, professional liability protects against the costs of defending negligence claims from clients and paying out damages awarded in lawsuits. Because malpractice claims and risk are on the rise, it is important for lawyers to have attorney professional liability insurance.
What the Policy Covers
Clients who feel they have been harmed by services or guidance that a law firm provided may file a claim as a result. If this happens, a professional liability insurance policy typically covers:
- Negligence due to alleged mistakes, poor advice, and/or failure to perform services
- Defense costs for lawsuits, regardless of fault
- Certain time periods, as determined by individual policies
- Employees, contractors, and temporary staff acting on behalf of the firm
Protecting Against Risk
Lawyers are prone to high liability risks because of their exposure to business deals and contracts. They are expected to perform their duties accurately and keep their mistakes minimal. To reduce risks, individuals and firms can:
- Agree upon and set expectations with clients
- Keep precise and detailed records
- Prioritize ethics and honesty with staff
- Maintain the practice within an area of expertise
For attorneys seeking professional liability insurance, policies should be written to cover the exposure and risk related to their particular field. Coverage will vary but generally includes judgments, court costs, attorney fees and settlements. Law firms can avoid potential high costs by carrying attorney professional liability insurance.