It’s not just about cowboys, like the song says; sometimes even lawyers get the blues–particularly if they find themselves on the pointy end of a lawsuit, such as when things go wrong during the course of providing their professional services to their clients who claim they have been sustained economic or financial losses due to their lawyer’s conduct. In matters of attorney professional liability, the stakes can be substantial, so purchasing insurance to cover this risk is an essential part of business expenses.

 

A scenario illustrating the need for coverage

 

Brian Allen, attorney at law, provided services to Jane Doe for her divorce settlement, which was complicated and drawn out over a three-year period. Ms. Doe was initially satisfied with what she thought was a fair and equitable distribution of the marital assets, but later on, found out that her ex-husband owned several additional properties to which she should have received an equal share of in the settlement. Ms. Doe felt that her lawyer made some serious errors in not performing sufficient due diligence to discover the additional properties her ex-husband held title to. To make matters worse, Ms. Doe then went over her many statements with a fine-tooth comb, and found several bills for attorney-client consultations at times when she could prove she would not have been available to talk, either in person or on the phone. Subsequent to these discoveries, Ms. Doe filed a lawsuit against her former attorney, alleging negligence and errors and omissions.

 

Policy pays for a variety of expenses

 

In the event you are sued for errors and omissions or negligence in the course of rendering your professional services, the coverage rides to the rescue–paying for everything from court fees to your defense costs, and any resulting damages or settlements up to the coverage limits on the policy. The often substantial costs of legal defense can reduce the amount of coverage that is available to pay for damages, so your agent may recommend selecting a policy that pays for defense expenses outside of the liability limits of the policy. In the case outlined above, the claimant was awarded a settlement that far exceeded the amount she had been charged for services rendered. Just think: Had the lawyer failed to have coverage at all, let alone in sufficient amounts, he would have essentially have worked for three years yet had a negative balance to show for it–not to mention the hit on his reputation that came from the complaints the angry Ms. Doe filed with the local Better Business Bureau and the negative reviews she shared with friends.

 

Talk to a professional insurance agent about your need for attorney professional liability insurance, for a clear understanding of what your risks are and how to reduce them as much as possible.

 

photo credit: View from the offices of the US Embassy in Beijing (license)
Professional Mistakes Can Have a Ripple Effect, Requiring Insurance