A Quick Insurance Guide for Attorneys in Solo Firms
This insurance guide is for attorneys who work as solo practitioners and may be thinking of buying a malpractice policy. One-person firms may have unique needs and challenges that more general resources may not always address.
However, note that some considerations may apply to firms of all sizes, so you may also want to check out this guide to legal malpractice insurance as well as our tips on choosing professional liability insurance.
Malpractice Insurance Guide for Attorneys: 4 Tips for Solo Practitioners
Before buying a malpractice policy, you may want to consider these four pieces of advice:
1. Check What Your Jurisdiction Requires with Respect to Malpractice Insurance
Currently, only two states require attorneys to have malpractice insurance. Lawyers in
Idaho have to carry limits of:
- $100,000 per occurrence; or
- $300,000 as an annual aggregate
Oregon also requires practitioners to carry $300,000 of claims-made coverage through a Professional Liability Fund (PLF).
Other jurisdictions do not require malpractice insurance, but you may have to disclose your coverage (or lack thereof) to clients and third parties.
With this in mind, you should check your local regulations to ensure that you are fully compliant.
2. Know That Solo Attorneys May Be More Vulnerable to Malpractice Claims
Malpractice claims could result in lost earnings, hefty legal fees, and multimillion-dollar payouts. Due to their smaller budgets, small businesses without malpractice insurance may not be able to handle losses of this magnitude and stay in business.
Note also that malpractice claims against larger firms may get more coverage in the media, which can foster a false sense of security for some solo attorneys.
3. Level Up Your Risk Management Before Applying for Quotes
Some insurance providers may not agree to provide you with quotes unless you have at least rudimentary risk management protocols in place.
While this may apply to firms of all sizes, solo attorneys who are just starting out may be less likely to have developed and implemented a well-thought-out risk management strategy. This may be understandable – as a one-person army, you probably have a lot on your plate as it is – but you should still give risk management serious thought.
Some best practices you may want to consider include:
4. Consider Getting a Backup Attorney
Certain insurers may require solo practitioners to have a backup attorney, and some may also ask for their name and address.
The role of a backup attorney is to stand in for you in cases where you may not be able to handle your workload due to an accident, illness, or other unforeseen circumstances. Depending on the situation, a backup attorney may:
- Contact your clients, the court, and other relevant parties
- Obtain postponements or extensions until you return
- Arrange for replacement counsel
- Take over your cases
Malpractice Insurance for Solo Attorneys: Final Thoughts
While working as a solo practitioner has its perks, it could also make you more vulnerable to potential risks. As a one-person firm, you may need all the protection you can get – and buying professional liability coverage is a good place to start.
Get your free quote today.
This information is provided for general purposes only and is not intended to provide individualized advice. All descriptions, summaries or highlights of coverage are for general informational purposes only and do not amend, alter or modify the actual terms or conditions of any insurance policy. Coverage is governed only by the terms and conditions of the relevant policy
Malpractice Insurance for Solo Practitioners FAQs
Read the answers to some frequently asked questions about malpractice insurance for solo attorneys:
Generally, malpractice policies are “claims made.” This means your previous employer’s policy should cover the work you did at the law firm even if a client files a claim against the work performed on behalf of your employer after you have left.
However, if your old firm dissolves or stops carrying malpractice insurance, you may no longer have coverage for your work there. In that case, you may want to look into getting extended reporting coverage or tail coverage for your prior acts at the firm.
In this case, your employer-provided coverage may not be enough to cover you. Work for someone other than the named insured typically falls outside the parameters of most malpractice policies. However, you should check with your law firm and the terms of the firm’s policy. If its malpractice coverage does not extend to your solo practice, consider purchasing your own policy for your work on the side.
As a solo practitioner, you may be running on a tight budget, especially if you are just starting out. However, professional liability insurance could still be a wise long-term investment.
A comprehensive malpractice policy can help shield you from what could be considerable financial losses. Legal malpractice payouts in 2019 and 2020 were at an all-time high, with more than 80% of insurers reporting at least
one payout exceeding $50 million.
Financial stability aside, there may be other benefits to getting malpractice insurance.
Your insurance provider may provide you with access to complimentary risk and legal practice management resources. You could use these to grow your business and further minimize your exposure to potential liability.
Carrying malpractice coverage can also make you look more trustworthy, which could raise your profile and help you attract and retain more clients.
Finally, some policies may provide additional coverage for other professional services you may perform as a trustee, executor, notary public, or title agent.
The numbers vary for each lawyer and depend on various factors, including:
- Your areas of practice
- The number and types of cases you handle
- Your personal assets, as they may also be subject to collection if a judgment exceeds your policy limits.