Why Purchasing Legal Malpractice Insurance Is Always a Good Business Decision As a risk manager for a nationwide legal malpractice insurer, I am sure it comes as no surprise that I believe the purchase of legal malpractice insurance is a good business decision. I can also anticipate that at least a few of you reading this would welcome the opportunity to debate with me my claim that it is always a good business decision. In light of this, allow me to make my case; and I will start by sharing the reasons I hear that some lawyers, typically those who practice in the solo and small firm space, decide to go bare. Why would anyone decide to go bare? The rationalizations run the gamut. Some try to justify the decision by declaring that malpractice premiums are beyond affordable. I’ll hear “just look at what doctors have to pay.” Others decide that if they ever get sued, they’ll just declare bankruptcy in order to avoid having to cover any resulting loss. Then there are those who choose to self-insure thinking the premium savings will more than offset any possible loss. I’ve even had lawyers tell me they’ve chosen to protect their assets in other ways. And then there’s this one. “Having a malpractice
policy simply invites claims. No insurance means no one will ever sue me because there’s no deep pocket.” I just shake my head over the naivety of that belief because it simply isn’t true. What’s wrong with that line of thinking? My response to the any of above rationalizations always starts with this question. Knowing that lawyers and those in their employ can and will make a mistake from time to time, what might the fallout be should a significant misstep ever occur on one of your client matters? I encourage you to think about the answer as a member of our learned and honorable profession. Clearly, should a significant misstep ever occur, your client will be harmed in some fashion. Now put yourself in your client’s shoes and ask yourself who should be held responsible, particularly if a financial loss is part of the equation? You know darn well what the answer is. After all, if a lawyer representing you on a personal injury matter blew a statute that resulted in a lost opportunity
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