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As an attorney, you know how damaging malpractice litigation can be. Depending on the scope of a case, the personal, financial, and reputational costs to the losing party can be immense. However, lawyers sometimes assume getting sued for malpractice only happens to other people, that somehow attorneys are immune because they know more about the law. Wrong!
The truth is, lawyers are subject to the same level of risk that professionals in other industries are. It’s just that they sometimes downplay those risks because they think they’re too smart to get sued. Do you underestimate your malpractice exposure? Have you taken appropriate steps to mitigate those risks with malpractice insurance? If not, read on to learn about the 10 ways malpractice insurance can add value to your business.
Given all of the threats just discussed, installing an insurance safety net around your firm makes tremendous sense. And it makes even more sense if you work in a high-risk practice area. According to a major insurer’s claim study, lawyers who practice in real estate, personal injury (plaintiff), family law, estate, trust, and probate, and collection and bankruptcy were much more likely to get sued than those who worked in legal areas such as corporation/business organization, business transactions/commercial law, worker’s compensation, taxation, or labor law, among others.
Similarly, lawyers who work as sole practitioners or in firms of two to five lawyers had a substantial greater malpractice risk than did attorneys who worked in larger settings. For example, according to a recent American Bar Association study, solo and small legal practices accounted for 66.24 percent of all malpractice claims filed against attorneys between 2011 and 2015.
Perhaps the strongest case for having legal malpractice insurance applies when there is a mandate to buy insurance or to disclose its existence to clients. For example, attorneys who are licensed to practice in Oregon are required to carry malpractice insurance. Seven other jurisdictions (including Ohio) require lawyers to disclose to clients if they do not have malpractice insurance. Seventeen other jurisdictions require them to disclose on their state registration documents whether or not they have insurance. The point is, being required to buy malpractice insurance or to disclose that you have (or don’t have) it is a powerful incentive to buy insurance.
At the end of the day, the value of malpractice insurance is sufficiently great that it shouldn’t take a state regulation to force you to buy it. When you consider the ten value-adds just reviewed, it’s rational to conclude that having malpractice insurance protection is not only a sensible, but also an essential element of practicing law today.
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