Lawyers Professional Errors and Omissions (E&O)

Certain areas of legal practice may give rise to malpractice claims that are especially difficult and expensive to defend against. For example, a law firm that handles patent law might engage in complex and protracted litigation for its client to determine who actually designed a piece of software. If this firm loses the case, its own client may come after them with allegations as complicated to defend as the original case. Attorneys who practice in excessively complicated areas like intellectual property litigation or handle oil and gas rights where so much money is riding on their performance will have larger claims and thus a greater need for higher limits. Real Estate and personal injury law usually have the highest frequency of malpractice actions. The insurance application should clearly show the percentage of each area of practice and any other types of activities the firm handles. And it should include relevant supplemental applications.

When the stakes are high, an agent needs to encourage the law-firm client to think about the losses it could comfortably absorb and help it determine the limits and deductible that are appropriate for its risk. Coverage for defense costs is particularly important for lawyers because they could face disciplinary procedures in addition to civil claims. Ideally, you’ll try to get defense coverage outside the limits and uncapped so it doesn’t erode the indemnity limits. Something as easy to do as typing the wrong name in an email that forwards confidential information to a third party could prove very expensive.

The world works on deadlines and an attorney who fails to file papers on time, or misses a court or hearing date, risks getting adequate compensation for a client. Similarly, a law firm without an efficient way to screen for possible conflicts of interest among its clients could find itself in an untenable position. Clients using calendaring tools and conflict of interest software demonstrate good risk management controls that can work in their favor. If these tools are not currently being used, an agent can use that information to act as the client’s trusted adviser.

Lawyers may be very comfortable with contracts, but that doesn’t negate the agent’s responsibility to explain that errors and omissions policies are written on a claims-made basis and how it differs from an occurrence policy. These clients need to maintain continuous E&O coverage to protect their futures from the results of their past work when it is challenged years after the work actually was performed. The agent will need to see the current policy dec page to properly extend the coverage back to the first date of continuous coverage.