Legal Professional Liability

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Lawyers’ Professional Liability

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What Is Legal Malpractice Insurance?

Also known as lawyers professional liability or legal malpractice insurance, this is typically the most important insurance policy a lawyer or law firm can purchase. Legal malpractice claims happen when an attorney is alleged to have failed to perform their duties according to the proscribed standards of professional and ethical conduct.

Additionally, even if such breaches of standards have not occurred, many clients may view a negative legal result as reason enough to bring a malpractice claim against your firm.

It’s an unfortunate fact of life that even the most diligent law firms are vulnerable to such costly claims. The potential exposures are numerous and include misinterpretations of the law, offering bad advice, missed deadlines, or conflicts of interest.

Given how commonplace legal malpractice lawsuits have become, having the right insurance program is a wise investment for any law firm.

Who Is Legal Malpractice Insurance For?

All attorneys need legal malpractice insurance, even though they hope to never have to use it. 80% of lawyers get sued at some point in their career, and you don’t want to face a lawsuit without legal malpractice insurance. However, certain areas of practice carry a considerably greater amount of risk.

Attorneys practicing in fields of intellectual property, loan modification, trusts, and personal injury cases are considered to be at higher risk by underwriters.

Working with trusts and estates invariably involves sensitive and personal matters, which makes attorneys who practice in these areas open to claims of legal malpractice from unhappy family members and non-client beneficiaries.

Additionally, while malpractice claims are subject to statute of limitations in most jurisdictions, many contain an exception specifically applicable to trusts and estates attorneys. (The statute of limitations is extended until the death of the original client).

Personal injury cases carry the risk of missed deadlines or “failure to calendar.” Additionally, clients often have extremely unrealistic expectations about the potential payouts they’ll receive.

Attorneys working on loan modifications typically work with a very great number of clients. This fact, combined with stringent government regulations, means they are at a significantly higher risk of being sued for alleged malpractice.

Embroker knows that your time is precious, which is why you can get your legal malpractice insurance quote in under 10 minutes with us by telling us more about your business.

Why Do You Need Legal Professional Liability Insurance?

The legal profession is highly regulated, and there are clear professional standards and expectations that all attorneys must adhere to. If a client loses their case and feels that their legal representative has failed to meet those standards, they can take legal action and allege that they were victims of legal malpractice.

Should the client prove malpractice and win, the attorney would be required to repay them for all the potential funds they would have received had they won the original case. However, even if the allegations are entirely baseless, merely dealing with a claim can eat up a lot of time and money.

In the event of an expensive lawsuit, the damages incurred could easily lead to the bankruptcy of your firm. Legal malpractice insurance precludes that possibility by covering both the costs of legal defense and possible damages awarded.

This is why, when dealing with potential legal malpractice claims, one can never be too cautious. It’s always a good idea to invest in lawyers professional liability insurance should you ever find yourself on the wrong side of a lawsuit.

Some states also require attorneys to carry legal malpractice insurance or disclose to clients that they do not have a policy. Read our legal malpractice insurance requirements by state article to learn about your state’s rules.

What Does Legal Malpractice Insurance Cover?

There are clearly defined limits to what even the most extensive legal malpractice policy will cover. At its core, legal malpractice insurance will protect your firm from errors and omissions that occur during the course of providing a professional service.

The policy will cover both the firm itself as well as individual attorneys. It will cover the legal defense costs associated with malpractice lawsuits as well as damages and settlements potentially awarded against your firm. A preferred policy will also provide legal defense in cases of fines and penalties being alleged against your firm.

Legal malpractice insurance helps protect you from claims of:

  • Negligence: A failure to understand the law and knowing how to apply it in different situations for the success of the case.
    Example – When an attorney acts out on their own interest.
  • Misguided advice: Misrepresentation occurs when the false statement was made carelessly or without reasonable grounds for the defendant to believe it to be true.
    Example – The defendant knew that the statement was false or disregarded whether it was true or false.
  • Misrepresentation: An untrue statement of fact or law made by Party A (or its agent) to Party B, which induces Party B to enter a contract with Party A thereby causing Party B loss.

    • Fraudulent misrepresentation: where a false representation has been made knowingly, or without belief in its truth, or recklessly as to its truth.
    • Negligent misrepresentation: a representation made carelessly and in breach of duty owed by Party A to Party B to take reasonable care that the representation is accurate
    • Innocent misrepresentation: a representation that is neither fraudulent nor negligent.
  • Personal injury: Every variety of injury to a person’s body, emotions, or reputation, as contradistinguished from injury to property rights.
    Example – Car accidents, slip and fall, wrongful death, assault, and battery.
  • Misuse of finance: When a financial professional fails to make suitable financial recommendations, executes transactions or trades as ordered, or commits theft or fraud.
    Example – When a person tries to take or control what belongs to someone for their own benefit. This can include their money, property, or personal information.
  • Missed deadlines: This occurs when the attorney misses an important deadline by waiting too long to file a claim or by not responding to court requests in a timely manner.
    Example – Claims must be brought within the statute of limitations set by law or they will be time-barred and your case won’t be able to proceed.
  • Conflict of interests: Attorneys cannot represent multiple clients with contrary interests. If one client would benefit and a second would be harmed by the attorney representing them both, this would be a conflict of interest.
    Example – An attorney cannot represent both spouses in a divorce since they would learn things that could be used against both spouses.
  • Most policies provide “innocent insured” coverage, which occurs when an attorney fails to report misconduct.

To learn more, visit our blog on 10 Common Mistakes That Can Lead to Legal Malpractice Claims and How to Avoid Them

However, it’s important to note that if the claim arises out of criminal, malicious, or fraudulent acts, your firm won’t be covered by any legal malpractice insurance policy. Additionally, most policies will also have an insured vs. insured exclusion, meaning that the policy won’t respond to claims or lawsuits between lawyers who both work for the insured firm.

What’s Not Covered?

Legal Professional Liability will only provide insurance coverage for your firm in legal capacities. This means that attorneys acting as board members, business partners, or occupying other roles won’t be covered for their errors and omissions, which is why looking into directors & officers insurance is also a good idea.

Employment-related lawsuits related to discrimination, harassment, failure to promote, and wrongful termination are to be covered by employment practices liability insurance (EPLI), and therefore don’t enter the scope of legal malpractice coverage.

Legal malpractice policies will typically exclude claims arising out of bodily injury and property damage, as these claims are typically covered by general liability insurance. One important aspect to note is that breaches of fiduciary duty will also be excluded from a legal professional liability policy.

Also, any claims where the insured firm was aware of a potential claim but didn’t disclose this information before the policy took effect won’t be covered.

How Much Does Legal Malpractice Insurance Cost?

One of the key questions related to attorney malpractice insurance is that there are many different factors that go into determining the premium a law practice will have to pay in order to secure the right lawyers professional liability insurance.

Let’s break down the factors that play a role in determining the cost of your legal professional liability insurance:

Size Of The Company

One of the critical factors that will determine your premium is the size of the firm, specifically the number of attorneys it employs.

Step Rating

The length of time each attorney has been with the company will affect the cost of legal malpractice insurance. This is called the step rating, and insurers use it to measure the potential exposures that occur as lawyers handle more and more cases for the firm. A lawyer’s premium will be at its lowest during the first year with a firm, and it will reach full maturity in the sixth year.

Prior Claims

Any claims that your firm had in the past will increase your premiums. Keep in mind that insurers won’t just look at the number of claims you’ve had but also at their severity and the degree to which you were at fault in these claims.

Additionally, firms that haven’t had a single malpractice claim filed against them in the past five years are eligible for admitted policies, which will typically drive the cost of insurance down.

Areas Of Practice

It’s no secret that certain areas of practice have more risks than others. Attorneys working on potentially volatile cases involving securities, medical lawsuits, international law, or intellectual property can expect to pay a lot more to be adequately protected. If your company has diverse clients and areas of practice, insurers will consider all your cases when calculating premiums.

High-risk law firm practices:

  • Class action lawsuits
  • Personal injury cases with large damages sought
  • Complex commercial litigation with significant financial stakes
  • Defending clients in criminal cases with severe potential penalties
  • Representing clients in high-profile and controversial cases

Low-risk law firm practices:

  • Preparing standard legal documents such as contracts and wills
  • Providing routine legal advice, such as on employment law or real estate transactions
  • Assisting with incorporation and business formation
  • Representing clients in relatively simple and straightforward civil litigation cases
  • Offering legal support services, such as document review or discovery assistance.

Examples of practices that are covered include:

  • Professional staff
  • Acquisitions/Mergers
  • Collection/Repossession
  • Entertainment
  • Estate/Trust/Probate
  • Medical Malpractice
  • Oil/Gas
  • Real Estate – Development & Land Use
  • Securities
  • Real Estate Commercial

Check out these blogs to learn more about the right coverage for your firm:


Lawyers practicing in metropolitan areas such as New York or Los Angeles can expect to pay a lot more for insurance when compared to those located in less-populated areas.

It’s important to note that cheaper isn’t better when it comes to legal malpractice insurance coverage. Given the potentially crippling costs of malpractice claims, what’s most important is to ensure that your insurance fully covers the activities of your practice.

Another critical factor in determining the cost of insurance is how much time you need to spend on the process of getting insured. If the process takes weeks and occupies hours of your attention, then that will directly impact your bottom line.

Check out our recent guide if you want to learn more about the specific factors that go into determining the cost of legal malpractice insurance.

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