Lawyers Professional Liability Insurance
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Lawyers professional liability insurance is at least as important to attorneys as medical malpractice insurance is to physicians, but doesn't get the amount of press that the more well known coverage does. While it may seem a paradox that an attorney would be sued, the Texas Lawyers Insurance Exchange paid over fifty million dollars in gross legal malpractice losses and twelve million in claim expenses in a five year span. One begins to wonder how much is paid out each year across the country because of the mistakes, miscalculations and even malfeasance of attorneys. This musing is not meant to cast doubt on any attorney's skill, but rather to show that despite an often confident public persona, they are human and can err from time to time just as other trained professionals. Thus attorney's professional liability insurance is an important consideration when an attorney hangs out a sign marking the beginning of his or her career in the centuries old practice of law.
The American Bar Association revamped its rules of professional conduct in the 1980's to include an understanding that there are conflicting responsibilities that are often encountered by the legal profession. It also admits that the profession is largely self-governing in an attempt to keep the government from a highly regulated presence in the practice field. It does lay out groundwork within the ABA's own governing system for attorney discipline in the cases of rules violations. A rapier-like mind has always been the companion of most attorneys who often try to paint their foes into a verbal corner, even Jesus Himself. "Then one of them, which was a lawyer, asked him a question, tempting him and saying, Master which is the greatest commandment in the law? Jesus said unto him, Thou shalt love the Lord thy God with all thy heart, and with all thy soul and with all thy mind." (Matthew 22:35-37)
Attorneys may be exposed to the possibility of a lawsuit against themselves for things such as over billing, refusing to represent clients for prejudicial reasons, hiding evidence and other similar conduct. In fact, these types of actions are labeled as attorney misconduct often opening the door for lawyers professional liability insurance to be needed. There is also defined attorney malpractice in which a lawyer is accused of not giving the client full service protection under the law or somehow being less than zealous or competent in his or her duties as a barrister. And just as the physicians that are often sued for similar violations in their field, attorneys become the defendants due to their actions or lack thereof. And because these lawsuits can be filed with millions of dollars weighing in the balance, lawyers professional liability insurance can be the only dam holding back a torrent of financially ruinous judgments.
Attorneys representing various forms of real estate transactions seem to be especially vulnerable to the types of errors and misconduct that might give rise to the need to be covered by lawyers professional liability insurance. Representing a client attempting to make a lot of money on a transaction that may later be proven to have lied or misrepresented a position can expose an attorney or law firm to later lawsuits. At times law firms can be accused of trying to make a big deal work that would be profitable for the firm rather than in the interest of the client it represents. In this instance, there may be some grounds for a lawsuit based on a charge of malpractice. Sometimes clerical errors or the drafts of legal documents lead to expensive losses for the represented client, again opening the door for lawsuit.
But there can be a snare that has caught many an attorney of various legal specializations and later been the basis for a charge of misconduct or malpractice. This is in regards to sexual relationships gone awry between client and attorney. Often divorce attorneys are placed in a very vulnerable position with clients who are emotionally wounded and vulnerable themselves. And this can cause some major legal issues for the lawyer. For example, private conversations outside the legal relationship are not privy to attorney client privilege. If there is an indication such a relationship may have hindered an attorney's ability to seek the best representation for the client, there may some grounds for a liability lawsuit later. The need for lawyers professional liability insurance is obvious in this scenario.
A Texas insurance study in the late 20th century estimated that half of the state's attorneys did not carry lawyers professional liability insurance. That choice may have come as the result of a barrister's over blown confidence of his own abilities to not be prone to error, or it may have been borne more out of an economic need. In major economic boom times, lawyers professional liability insurance can be more affordable because of the ability of insurance companies to find profitable resources for investments. In more difficult times, these resources can dry up, but the number of claims remains the same or can even go higher, causing extreme cash flow issues with indemnifiers. The results are much higher premiums and for the average attorney who makes about $75,000 a year, lawyers professional liability insurance becomes a luxury and not a necessity. This certainly makes struggling lawyers and their families vulnerable to large financial loss in the event of a liability occurrence and the reason for a number of panic flights away from this noble profession.
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