1 insurance is inexpensive You will be at a heightened risk
for conflicts of interest to arise, given
the ethics rules’ distinctions between
how “current” and “former” clients are
treated for conflicts purposes.
2 insurance is not a commodity
Many insurers compete solely on price.
There are some very inexpensive policies that offer very limited coverage.
When purchasing insurance, the goal
should not be to pay as little as possible, but rather to ensure that the cost
of a potentially catastrophic risk has
been transferred to a responsible, financially strong insurer, who will cover
a claim in exchange for a reasonable
3 risk management matters More than ever, insurers are asking that law firms have robust loss prevention protocols Starting with diligent client intake and ending with
uniform use of disengagement letters,
firms that implement law practice
management best practices throughout the lifecycle of client engagements
encounter fewer and less severe
claims, and pay lower malpractice premiums accordingly.
4 claims happen No matter how great a job your
firm does, you may be sued. Even if the
legal representation is flawless, a “bad”
result (as there often is for one side)
can lead to an unhappy client making a
claim. Even frivolous allegations of
malpractice can cost money and time
5 cyber liability insurance is gaining traction
As keepers of sensitive information, law
firms of all sizes are tempting cyber-targets. While malpractice insurance
may address some potential claims in
this arena, many of the other “direct”
or “first-party” claims arising from a
hacking event can only be addressed
by cyber-liability insurance, such as:
n;Costs of retaining an expert to get
a firm’s systems up and running
n;Business interruption loss (lost
billings due to a system being
n;Dealing with cyber “ransom”
demands (pay us X dollars and
we’ll unfreeze your systems)
Many insurance industry experts believe that law firms are on the brink of
a wave of losses in this area, given the
lack of robust security at many firms.
6 for larger firms, manage- ment liability (private company d&o) is becoming standard
Claims against members of a law firm’s
management committee can be devastating. Allegations such as breach of
fiduciary duty or breach of the partnership agreement are time consuming
Law firm dissolutions often lead to
blame placed upon the decision makers.
D&O insurance can greatly ameliorate
these claims, which typically involve
high-running emotions and high-dollar
7 claims adjustors and defense counsel are
the new underwriters
Insurance companies have come to realize that claim adjustors and defense
counsel are in the best position to
evaluate a law firm. In addition to all of
the standard reasons law firms should
cooperate and be professional in the
event of a claim, firms need to understand that they are being “
re-under-written” at this juncture.
Attorneys’ conduct not only has
ramifications for the claim, but also
interactions with claim professionals
can significantly impact future insurability.
These seven facts about your professional liability insurance,
or lack thereof, can make a big difference when it comes to
protecting your firm.
STEPHEN LOWE, EXECUTIVE VICE PRESIDENT
AHERN INSURANCE BROKERAGE
Steve has over 20 years of insurance experience in the development and
service of professional liability programs for attorneys and manages the
Professional Liability Program for the State Bar of Arizona, for which
AHERN is the endorsed broker.
He can be reached at email@example.com
The 7 Key Facts You Need to
Know About Law Firm Insurance