What is Legal Malpractice Insurance?
Legal malpractice insurance or LMI is meant to protect lawyers from potential lawsuits filed against their firm or themselves due to their willful misrepresentation or negligence of their client. Legal malpractice may not be as prevalent as medical malpractice, but it does have far reaching consequences nonetheless. Because of that, as a lawyer, you should certainly get LMI.
Are you required by state law to carry LMI?
Currently, if you live in Oregon then you need to absolutely carry LMI. As of ’09, the average yearly cost for LMI was eighteen hundred dollars per annum. As of ’11, LMI is not mandatory, as of 2011 lawyers are required to inform their clients of whether they carry LMI or not.
Why should I get LMI if it’s not required by law?
As previously mentioned, the law states that in many states you need to inform your clients about whether you carry LMI or not. As you can tell, this is a great selling point and it can certainly help you get more clients if you have legal malpractice insurance than if you do not. For instance, if someone is thinking about hiring you as an attorney, but later on they change their mind because they find out you don’t carry LMI, then you can lose a pretty good client. After all, clients want to have the peace of mind that they do not take any risks when hiring you.
When it comes to LMI, it’s necessary for the obvious reason and that is financial damage resulting from a negative result in malpractice lawsuits. When you think about it for a second, we’re all humans and this means that we’re prone to making mistakes. While in general, these mistakes are minor and may not have any ill effects on a matter, if they aren’t discovered on time then they can raise serious concerns for you as a client. If the lawyer lacks LMI, all it takes is a single big mistake to wipe out his entire practice.
How much does LMI cost?
In terms of cost, it’s important to note that legal malpractice insurance will vary depending on your area of practice and where you live. The average cost can range anywhere from five thousand dollars to eight thousand dollars for members of the bar that mainly focus on personal injury, real estate, and divorce. The rates may also be higher for certain types of attorneys.
According to the Respondeat Superior doctrine, employers may be held responsible for the mistakes of their employees. This is also true when it comes to attorneys and their firms, too. If a legal assistant or a paralegal fails to record vital information or file on time, this can be easily imputed on the firm or the lawyer (employer).