“The cobbler’s children have no shoes” and other such proverbs in different cultures highlight the phenomena that people successful in a field often do not demonstrate that skill set in their personal lives or business. Coupled with the average lawyer’s desire to “just practice law”, many practitioners just do not pay enough attention to the need for errors and omissions coverage for their practice. Yet most of these same good lawyers will properly advise their clients to obtain needed coverages, and even call their own automobile insurance agent from the dealership when they acquire a new vehicle. But, a client asserts a claim sometimes the lawyers don’t handle the notice correctly, or yikes — they do not have any coverage at all.
Sure, you do not have to have such coverage to practice in most all states, but why would you not? It is a cost of the practice of law and if you cannot afford it, perhaps a new personal mission statement is in order. If you are not making enough income to cover needed expenses, perhaps a change is needed. You will get claims in any practice, and some will result in losses. No one is immune from these. It may also be difficult to build any practice if business clients and referring law firms know you have no malpractice coverage.
At the 2016 National Legal Malpractice Conference, they reported that small law firms were seeing an uptick in claims. Practice pressures arising from competition and client demands for efficiency to just survive in practice likely contributed to more claims. They report larger firms are seeing stabilization of the number of claims, but the bad news for larger firms is that the damage numbers per claim are spiking upwards. The dreaded mistake, that simple error, continues to plague all firms. Panelists pointed to practice pressures causing practice teams to be leaner, along with client restrictions on legal work allowed, are causing basic “fail safes” such as proofreading to be skipped, leading to losses. Small slips, but big falls as they say.
If you are reading this and do not have coverage, jump up and go call someone for quotes and coverages. If you have it, how about educating yourself a bit about your policy and its requirements. It does not help to have it, and then fail to notify the carrier immediately when you know of a claim. It does not help to omit key information on your application, leading to a later denial. Can you acquire prior acts coverage when you place your insurance? Does the policy cover you for the costs of ethics complaints? Are you covered if you are acting as an arbitrator, mediator, or in a fiduciary capacity? See Tami K. Meyer, “Does Having Malpractice Insurance Decrease Malpractice?”) (http://goo.gl/iO7BpX).
We all know about overhead. Yes, errors and omissions coverage costs real money and falls into that category. I argue you cannot afford to be without the coverage on a gap free basis. Then, when you cease to practice, buy a “tail coverage” policy and sleep well.