Three Questions About LPL Insurance that New Attorneys Should be Asking
New attorneys have a lot on their mind: passing the bar exam, where they want to practice, and areas of law that interest them. Lawyers professional liability (LPL) insurance may not be foremost on their minds, but that doesn’t mean it shouldn’t be, since risk comes with the territory.
Here are three questions about LPL insurance that new attorneys should be asking:
- How Much LPL Insurance Do I Need?
This amount is different for every lawyer and depends upon the number and type of cases you plan to handle, and the potential amount of damages and defense costs should a claim arise. You will need to consider whether or not you want a per claim limit on a specific policy period for multiple claims, and keep in mind that almost all LPL policies “deplete,” meaning that the fees and costs for your defense will be paid from the limit available for the claim. If you have a very low limit ($100,000) it may be possible that you don’t have enough coverage available to defend the case through trial, leaving nothing left over to satisfy a potential judgment against you.
- Are There Areas of Practice that are Inherently Riskier than Others?
Yes. Some of the areas of practice that are considered riskier in the context of LPL insurance include securities, intellectual property and patent work, trusts and estates, personal injury cases, and new areas like loan modifications. According to a LexisNexis report, mismanagement of trust funds is one of the leading reasons lawyers lose their license to practice. Conflicts of interest and missed deadlines are also among the top five reasons for malpractice claims.
- What Risk Management Issues are Unique to a New Attorney?
The biggest risk may be the failure to know enough to avoid the risks. The intricacies of trust account accounting, fee-sharing arrangements, marketing pitfalls,, conflicts of interest, and properly establishing cash management procedures can all be risky propositions for a recent law school graduate. New attorneys need to be extremely proactive in asking questions about the proper way to conduct their young practice before issues arise.
To learn more about risk management and LPL coverage for new attorneys, contact
USI Affinity today.