Legal Malpractice Insurance helps a lawyer to economically manage professional liability risk by helping to pay for costs related to the defense of a claim as well as legal damages that may be assessed against you. Additionally, policies may pay for some intervention to help avoid the cost of a full-blown claim or lawsuit.
Specifically, your legal malpractice insurance policy will contribute to the payment of defense costs and indemnity payments incurred to resolve claims filed against you or your firm alleging acts, errors, or omissions made in the course of providing legal services under the auspices of the named insured entity.
Lots of factors go into determining whether a particular claim is covered under a particular policy. We’ll take a look at several of these factors over the course of our next number of blog posts.
Let’s start by examining the meaning of the phrase “legal services” as it relates to legal malpractice insurance:
To be covered, a claim needn’t be an actual lawsuit, or even necessarily brought by a contracted client. But, the activity at issue must fall under the policy’s definition of “legal services.”
While the definition of “legal services” will vary slightly from carrier to carrier, there are some general understandings that apply to almost all policies and carriers, including policies offered by Protexure Insurance Agency, Inc.
In particular, “legal services” consist of services usually and customarily considered to be those performed by lawyers on behalf of clients. These would include litigation work, criminal defense, business transactions and real estate contracts representation, personal trusteeships and guardianships, estate executorships, and other advice about the law and legal liability. Additionally, almost all carriers include acting as a mediator, arbitrator, or notary under the definition, as well as title agent and escrow when such services are provided as part of a larger representation. Coverage is not affected by how or whether you have been paid: claims arising out of pro bono services are subject to the same coverage as any paid work. (But, usually, services provided to immediate family members or their businesses, are not.)
Beware, though, that other services you perform, even if provided to a paying client of your firm, may fall outside of the definition of covered legal services, depending upon the particular circumstances under which they occur. These could include things like acting as a real estate broker or financial planner/investment advisor for a company or individual separate from developing a comprehensive estate plan, for instance; or providing general accounting or bookkeeping or tax-filing services, especially if you hold other professional designations or certifications beyond being a licensed lawyer. Further, serving as a board member for a company or non-profit organization is usually not considered to be “legal services” for purposes of legal malpractice insurance policies, even though serving as general counsel most likely would be. Therefore, if you regularly wear any of these other hats, it is important to consider purchasing additional legal malpractice insurance policies to help manage the risks arising from such multi-faceted work.