Posted on: October 11, 2018 by Huntersure LLC.
Legal malpractice insurance for attorneys is a fundamental layer of protection for legal professionals. This kind of insurance protects against claims of negligence and errors and omissions among others, and can safeguard attorneys against threats to their bottom line and reputation.
However, only one state in the country, Oregon, requires lawyers to carry legal malpractice insurance. Since this is the case, legal professionals may not feel compelled to invest in this coverage or if they do have it, may not feel the need to disclose it to their clients. Knowing the rules for your jurisdiction can help protect against any confusion and keep away from any ethical issues.
Some states have certain jurisdictions that require lawyers to inform a client directly if they don’t carry a certain level of malpractice insurance. Within individual states there may be areas that require a level of transparency between lawyer and client, and some areas that do not. Lawyers who fail to communicate that they have malpractice coverage may end with them be reprimanded and even suspended from practice.
States like Alaska, California, Ohio, New Mexico and South Dakota are just some states with these varying rules. If your clients are not made aware, they can bring issues against you which will only spell trouble for your practice.
There are a number of jurisdictions in the country that require lawyers to disclose on their periodic registration statements whether they indeed have malpractice insurance. What is needed here is knowledge of a lawyer’s insurance information so they keep things transparent with their clients, who can then get access to insurance information. Not disclosing this coverage on a periodic form can result in suspension.
As mentioned, only one state in the union requires that all lawyers have malpractice insurance. So, chances are, a good number of lawyers don’t have it in place. What’s more, those who do have malpractice insurance may think that not disclosing it to their client is necessary, since it’s not a relatively well-known program.
The idea behind not disclosing to clients that a lawyer carries insurance is that it may unfairly stigmatize those who are not insured or may even encourage claims against those who do have insurance. However, those who believe in having mandatory disclosure as a rule say that clients should have a grasp on the risk that is included in having a lawyer on retainer who is not insured.
Some states are still in debate of whether or not they should require to have this insurance or disclose it to clients if legal professionals already have it. While this is still a topic of discussion, it should pay to cover yourself with malpractice insurance and look into seeing if your jurisdiction requires disclosure to protect against ethical risks.
Huntersure LLC is a full-service Managing General Agency that has provided insurance program administration for professional liability products to our partners across the United States since 2007. We specialize in providing insurance solutions for businesses of all sizes. Our program features can cover small firms (grossing $2.5 million annually) to large corporations (grossing $25 million annually or more). We make doing business with us easy with our breadth and depth of knowledge of E&O insurance, our proprietary underwriting system that allows for responsive quoting, binding and policy issuance and tailored products to meet the needs of your insureds. Give us a call at (646) 751-3030 to learn more.