E&O: Errors & Omissions

Lawyers Professional Liability

No matter what the nature of a law firm's practice, today's law firms are increasingly the target of client claims and lawsuits. This can be the result of unreasonable client expectations, frivolous claims or real errors. All law firms need to buy professional liability insurance to protect them from client claims, and most do.

The market for lawyers professional liability insurance has been extremely competitive. However, underwriters are beginning to realize that they may have difficult or unprofitable books of business, and are taking steps to improve their results. These changes include increased pricing, more restrictive underwriting requirements and outright non-renewals. At this time of market turmoil, the lawyers professional liability segment can be a significant opportunity for new sales.

Exposure

Lawyers do have professional liability claims. The claims tend to be severity claims, but the mix varies by the type of operation and operating characteristics. If a client has unmet expectations, disputes can and do occur. This is often exacerbated by fee bills that some clients view as too high, resulting in an increased incentive for clients to sue.

In addition to claims directly against the firm by clients, lawyers can also find themselves named as defendants in actions against their clients. For example, a law firm may be named as a defendant in a shareholder lawsuit against the law firm's client for work the law firm did for the client. One basis for these suits is a breach of duty to the public.

Underwriters look at a wide range of operating characteristics. The obvious exposure factors are size and type of practice. Other factors include loss experience, turnover, financial results and internal practices.

Law firms with some claims history, or with unique and difficult operating characteristics, can be difficult to place. When a lawyer makes a mistake their clients are only too willing to sue. The resulting poor claim experience can cause significant problems for the lawyer's E&O coverage renewal. Other operating characteristics, including size and type of work, can also create difficulty in placing lawyers' E&O coverage.

Professional Liability Insurance

Lawyers professional liability insurance, sometimes called malpractice, errors and omissions or E&O insurance, is available from a wide range of specialty lines insurers. Coverage and pricing varies greatly depending upon the type of law firm and its operating characteristics.

Limits and deductibles vary with the size and type of insured. Standard limits for most small to medium sized organizations start at $1.0 million. Minimum premiums vary, but can be as low as $1,500. Policy forms vary significantly, but typically are forms. Defense costs are covered both inside and outside the limit (sometimes this is offered as an option).

Coverage options can include the following:

Professional liability coverage is also available for attorneys employed by corporations and other entities, called "employed lawyers", who are not "practicing" in the traditional sense.

Distressed law firms also present a great sales opportunity if their coverage can be placed. As a professional liability specialist, Mercator Risk Services Inc. ("Mercator" or "Mercator Risk Services") provides coverage for distressed lawyers from a number of markets. Distressed lawyers requiring special underwriting include the following:

Mercator Risk writes Lawyers Professional Liability accounts on a primary, excess or hard to place basis for all size accounts, from solo practitioner's to firms with over 50 attorneys. Examples are:

Mercator Risk Services provides coverage for a wide range of legal professionals. Please let us know your client's needs and we will provide you with information and assistance with your particular situation or account, and professional liability coverage.

Contact us at info@mercatorpro.com or use our web mail form.
(*Office hours from 8am-5pm EST)

© 1999-2008 Mercator Risk Services | Legal Stuff

Designed and Maintained by ForeSite