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Malpractice Insurance FAQs for Solo Practitioners

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There is no law that says attorneys have to obtain legal malpractice insurance. But a solo attorney’s potential exposure, given his practice area, will likely prompt him to consider what a malpractice lawsuit might potentially cost him in terms of damages and defense costs, and whether he wants to buy protection against that risk.

LPL FAQs for Solo Practitioners

Solo attorneys typically have a number of questions regarding lawyers professional liability (LPL) insurance coverage, including:

Are there practice areas that are generally riskier than others?

 Yes. Some of the higher risk areas may include transactions involving securities, intellectual property, trusts, estates, plaintiff’s personal injury cases, and loan modifications.

How much LPL coverage do I need?

This answer will be different for every lawyer and depends on the number and type of cases handled and the potential amount of damages and defense costs, should a claim arise. A solo practitioner should consider the nature and extent of both his business and personal assets, since if he is found liable for malpractice, his personal assets may potentially be subject to collection under a judgment.

What is a “retro date?”

The retro date is the date after which the allegedly negligent act must have occurred. This date should, if possible, extend back to the date you began practicing law, but at a minimum cover the entire time period of your work at your previous firm. However, if your prior firm dissolves or ceases carrying LPL coverage, you will no longer have coverage for your prior acts and you should consider purchasing Extended Reporting Coverage, also known as tail coverage.

Do LPL policies cover pro bono work?

If pro bono work is done under the purview of the named insured, it is most likely covered. Sometimes pro bono work is also covered under a policy purchased by the pro bono association (a volunteer lawyer society or a bar association).

What specific risk management issues do solo attorneys face?

The biggest risk might be the failure to know to avoid risks. Many attorneys who have worked in a firm setting for a long period of time have never had to concern themselves with risk management issues like trust accounting, fee sharing agreements, client development, advertising, and conflicts of interest, which were all likely taken care of by someone else.

A solo attorney should be extremely proactive in asking questions about the proper way to conduct their law practice, before issues arise.

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