Does my lawyer have insurance? Does my lawyer need insurance?
There are two questions that every client should ask: does my lawyer have professional liability (“malpractice” or “errors and omissions”) insurance? And, does my lawyer need malpractice insurance?
First, the second question, which as a lawyer you should be asking yourself, and the answer is simple: yes. And the reason why is also simple: everybody makes mistakes, even you, Mr. or Ms. Hotshot Lawyer. From 45 year veterans of hundreds of trials down to the newly minted law school graduate just hanging a shingle, everybody can overlook something, miss a deadline because they wrote a date down wrong, forget to update their address with the court, fail to follow up with someone, or any number of a million different ways that a client’s case can not just go off the rails, but also plunge into the canyon and burst into flames. As lawyers who sue and defend other lawyers in legal malpractice claims, we have seen all of that, and more. You should protect yourself, your livelihood, and your family, by purchasing insurance. Some lawyers think that by not having insurance, they will not be the target of a malpractice claim, but that’s false—and, if you don’t believe me, just ask the lawyer who just wrote his last settlement installment payment to our firm and our client last week. And after all, you have insurance for your driving, don’t you? And probably a whole host of other things. Professional liability insurance is absolutely no different. In a later post, we’ll discuss how much coverage you need, or how to go about estimating how much coverage, what sort of questions to ask your agent, and what kind of coverage you ought to get.
Now, let’s approach this question from the client’s perspective. The answer is the same: yes, your lawyer needs malpractice insurance. Why? The plain truth is, mistakes happen. Far more often than not, what went wrong was not a malicious, intentional act by the lawyer—despite what a lot of clients want to argue, it was just a mistake, like somebody who was distracted or was not paying attention and hit your car with their car: they were simply negligent, distracted by something else, forgot to do something necessary, and caused you damage. And mistakes can happen to good lawyers just like they can happen to bad lawyers, to experienced lawyers and inexperienced lawyers alike. That’s why we buy automobile insurance, and uninsured/underinsured motorist insurance (you’ve got some, right?! better check!), and homeowners’ insurance. If your lawyer makes a mistake and compromises your legal interests causing you damage, then you may not be able to recover from anyone else besides your lawyer. That’s why your lawyer needs malpractice insurance.
For the first question, how do you know whether your lawyer has insurance? Most people assume that lawyers are required to have insurance in order to practice law. But that’s not true in most states, including Georgia; you won’t know whether your lawyer has insurance unless you ask. You should always ask your lawyer, in the initial interview, whether they have malpractice coverage, what company it’s with, and what the limits of the coverage are. And from the lawyer’s perspective, this is an opportune time to be forthright and up front with the potential client and show them that you are responsible. Some insurance industry professionals estimate that about 20% of lawyers in Georgia do not carry any malpractice insurance, but you and your firm are insured. Use it as a selling point for your firm: not only will you be there to protect the client’s legal interests, but if something does happen to go wrong—and nobody is immune from mistakes, remember—then there will be insurance available to cover the potential damage. And, don’t forget, sometimes insurance companies can get involved early in a “claim repair” mode, and fix whatever the mistake was before it causes damage to the client.
Malpractice insurance is an area where both clients and lawyers need to be proactive, about obtaining it, finding out whether it is in place, and about quickly reporting and dealing with claims if they arise. Because we represent clients and lawyers involved in malpractice claims, we have an excellent perspective on risk avoidance for lawyers and clients. If you have any issues or questions, give us a call, we are always happy to talk with you about your particular situation.