In representing clients, attorneys assume certain professional obligations and responsibilities. Unfortunately, in their capacity as advisors to their clients, they also take on certain risks. To protect themselves, along with their firm and staff, from potential liability, they should make sure that they have dependable attorney’s professional liability insurance.
There are several types of coverage attorneys should consider to protect their office and its operations, especially attorney’s professional liability insurance. Various insurance policies include:
- Property Coverage: Every office requires coverage to protect the furniture and fixtures that are needed to keep the office in operation. If you own the building that houses your office, you will need property coverage to protect that investment. If you rent your office space, you need to consider any improvements and betterments that you have made to the basic property in order for it to fit your needs. Business personal property also needs to be included in the property coverage. This can include furniture, fixtures such as shelving and file cabinets, and equipment such as computers, copiers, and facsimile machines. Your coverage should include time element, such as extra expense in case you have a fire and need to rent space in another building during the time to repair.
- Electronic Data Processing Coverage: In our modern world of computers, electronic files and processing equipment, additional coverage is needed under Electronic Data Processing (EDP coverage) in the event of a loss that requires that the computerized information or software to be recovered or replaced.
- General liability Coverage: This will provide protection against third party bodily injury or property damage. It is important to note that this coverage does not protect your office against claims of malpractice.
- Data Breach Coverage: What exposure would your office face if one of your employees lost their laptop or if hackers stole private client information? In today’s world, even encrypted information can be stolen and hacked. Data Breach Coverage can protect your office in the event of identity theft or hacking.
Most general office policies are purchased as either a Commercial Package Policy (CPP) which combines the Property & General Liability coverage or a Business Owners Protective (BOP) policy which includes the Property, General Liability and various coverage extensions, such as EDP.
Other Basic Policies Required To Protect Your Office And Employees
- Workman’s Compensation in case one of your employees is injured on the job.
- Commercial Auto for any vehicles owned by the business.
- Hired & Non Owned Auto coverage to provide protection in the event you or an employee rents a vehicle or uses their own vehicle for business use.
- Surety bonds may be required for various operations within your office such as providing notary services, etc.
- Employment Practices Liability to provide protection against claims by your employees for a multitude of assertions such as harassment, abuse, or wrongful dismissal. This coverage can also be purchased for third party claims to protect your firm in the event that a third party, such as client, alleges harassment or abuse.
- Umbrella coverage to increase the limits of liability provided by the basic general liability and auto policy.
Attorney and Lawyer Malpractice
When a person sets themselves up as a professional they ask us to believe they have a special training and/or talent that allows them to help us. We place faith in that person and they are paid a salary that reflects a unique talent and are held in revere by society. When that person improperly performs their duty or fails to perform their duty they are held liable if damages ensue. Every professional operation such as attorneys, medical professionals, real estate agents, insurance agents, etc. have a need for what is referred to as Errors & Omissions coverage which is also known as malpractice or professional liability. This coverage provides defense and judgment protection to the insured in the event that they are sued for an error or failure to provide services. Errors & Omissions policies vary from company to company and the assistance of your insurance agent can be invaluable to be certain that your policy provides adequate protection without any gaps in coverage.
Besides property coverage for their office building, attorneys may also require coverage for the personal property of others, or for improvements and betterments on the premises. With adequate coverage in place, attorneys may avoid paying for most of the costs of a monetary loss as a result of legal liability during the course of representing a client. Coverage may even apply to cases where an attorney’s act or omission leads to the personal injury of another by the lawyer’s client, or in case of a negligence claim by a current or former client. An independent insurance agent, knowledgeable about attorneys professional liability insurance, will assist lawyers through the process of supplementing existing coverage, or buying a policy for the first time.
Attorneys might be sued for malpractice in four general areas:
- Negligent errors, and
- Negligence in professional relationships, and
- Fee disputes, and
- Claims filed by an adversary or another non-client.
An attorney must, by law, act with his client with honesty, fidelity, integrity, good faith, and fairness. He must possess the skill and knowledge that members of his profession normally have.
An attorney must respect attorney/client privilege and cannot have an interest that is adversary to his client’s. He cannot use the information he acquired from his client through their relationship. For example he cannot first advise a client not to purchase a piece of commercial property and then later buy that property for himself.3
The elements of a malpractice claim against an attorney are:
- The attorney owed the client a duty, and
- The attorney breached that duty, and
- The attorney’s breach of duty proximately caused injury to the client, and
- Damages occurred.4
Attorney’s malpractice includes wrongful acts, which for an attorney would include a breach of fiduciary duty as long as it isn’t fraudulent, malicious, or dishonest.5
An attorney must make full accountings of all money transactions.
Attorney’s Professional Liability Insurance Losses
I’ve also had personal experience as a claimant in a Legal Malpractice case.
My attorney used information he learned in the course of our attorney/client relationship to convince the people who employed my agency to end their contract with us. He helped them establish their own entity to do the work my agency had done for them and became the principle officer of that new entity.
I not only sued him, I also requested that the bar association review the case for possible disciplinary action.
We had a tape of my attorney advising the board of the company we had a contract with to create the new entity before I took advantage of certain things he had come to know about as my attorney. The bar association referred me to a citizen’s panel who told me it was the most egregious example of malfeasance they had reviewed. They referred it to the bar association who rejected it due to “lack of evidence”.
This was not the only example we experienced where the profession circled the wagons to protect their own. Because of our long career in insurance, we knew dozens of attorneys. We approached over ten firms who we considered friends and excellent lawyers. Each of them turned us down because lawyers, as a rule, will not take on Legal Malpractice cases. When we finally found an attorney who would and brought our case to court, every judge in the district recused themselves because the attorney was “a member of their bar association”.
Our case was hardly typical, but demonstrated the ineffectiveness of our court system as a place to find justice in some matters. Judges are political animals who rely on the system for their living. Attorneys watch out for each other. The law is clear; and what was done to us was not a gray area. Getting the legal system to respond was an entirely different matter.
Our case was settled before we went to court. We received a nice amount of money, but not directly from that attorney. His affiliation with our one time customer ended within a very short amount of time under cloudy circumstances. He was later indicted in another state. I never heard what resulted from that action.
I have great respect for most attorneys and medical personnel.
In the course of representing clients, attorneys perform a variety of professional services. They give legal advice, advocate and negotiate on their clients’ behalf, and act as a fiduciary. While providing professional advice and legal services to clients, lawyers may be exposed to potential liability for property loss or damage sustained by a client, or another, or for professional negligence in the course of the representation. To make sure that their own and their firm’s assets and property are safeguarded in the event of a professional negligence lawsuit, attorneys should contact a local independent commercial insurance agent to find out about supplementing existing professional liability insurance, or purchasing a policy for the first time.
Most commercial insurance policies have coverage for accidental personal injury in the course of representing a client, and other similar events. Depending on a policy’s terms, in case of loss or damage incurred by a client as a result of a lawyer’s actions or potentially negligent professional services, professional liability insurance can cover most of the expenses associated with a defending against a claim. An independent insurance agent, familiar with the challenges faced by attorneys who represent private clients, can recommend a policy tailored to their firm’s needs, and advise them as to the kinds of commercial coverage available, along with typical exclusions and limitations in most policies.
In determining the options for professional liability coverage suited to a particular attorney or firm, an independent insurance agent will ask questions about the services provided by an attorney, and whether an attorney ever stores or maintains clients’ personal property at their office. Also, an independent insurance agent will evaluate factors like an attorney’s fee structure and how arrangements for client payments are made, how the firm ensures that documents are timely filed in the local courts, and how attorneys keep track of phone or email conversations with clients. A seasoned independent insurance agent may also assess an attorney’s practices when it comes to returning files and belongings to clients after a matter is resolved, whether an attorney ever transports clients to and from meetings or court hearings, or how a lawyer accesses and maintains client’s financial documents, like bank account statements.
By reaching out to a local independent insurance agent, lawyers can gain an understanding of options for professional liability insurance. They can get answers to their questions about coverage, and choose a policy suited to their firm’s business insurance requirements. With a professional liability insurance policy through a local independent commercial insurance agent, lawyers know that in case of a property loss or damage, or a negligence claim, their firm and practice are secure.
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