This Is the Reason for the Lawyer’s Professional Liability Insurance Coverage

Studies indicate that professional liability lawsuits against lawyers are on a dramatic rise. The reasons for the lawsuits run the full gamut of associated accusations, from unintentional errors to lack of fully dealing with the client’s worries to conflict of interest to actual breach of fiduciary duty.

Understandably, of course, having insurance protection is something that all attorneys and attorney companies should have in place.

Continue reading for attorney professional liability insurance claim scenarios.

Malicious Prosecution

An attorney’s company brought an eleven-count complaint in the name of its client. Then, the action was dismissed. The client turned around and sued the law firm for malicious prosecution. The legal company was not too concerned because it was clear that the plaintiff could not succeed on all counts of the case. This is the reason why it went ahead with a defense. To the law firm’s chagrin, the wealthy plaintiff was intent on harming them. He therefore chose to bring the case before the trial and appellate courts, resulting in more than $1 million payouts for the insurance company’s defense.

Legal Malpractice/Legal Error

A legal company filed a bad faith complaint against one insurance provider in the name of a few homeowners. The lawsuit referred to complaints about the insurance company’s denial of associated water and mold damage claims. The law firm helped facilitate a settlement in which $190,000 was awarded to the homeowners. Following the settlement the homeowners brought a $635,000 lawsuit against the law firm in regard to legal malpractice for allegedly taking too much time to file the original complaint, as well as for what they claimed were serious professional errors. The homeowners said they were forced into the settlement – something that left with recompense of less than full value as a result of a debilitated case. The law firm’s insurance paid approximately $100,000 in defense costs that ended resulted in a $120,000 settlement.

Negligence or Breach of Contract and Fiduciary Duty

A law firm was assigned to defend individuals from an embezzlement of family funds lawsuit. After all sides of the claim decided to put the family home up for sale at a fair market value, the suit was dismissed. The previous clients turned around and filed a complaint against the law firm for negligence, breach of contract, breach of fiduciary duty, intentional infliction of emotional distress, misrepresentation, statutory violations and constructive fraud. The previous clients claimed they had been taken for a ‘ride’ in respect to the selling of the family property. They demanded payment of several hundred thousand dollars due to the escalation in the real estate market. Prior to jury selection, the plaintiffs determined it was in their interest to terminate the lawsuit. Currently, the plaintiffs have asked for an appeal. The law firm’s insurance covered about $200,000 in the defense as of now in this ongoing saga.

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