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Is the Cost of Legal Malpractice Insurance Worth It for Solo Practices?

Posted by Joe Barnard, CPA on Sep 28, 2017 11:42:00 AM
Joe Barnard, CPA
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17-Solo-PracticeWhen you’re starting a solo practice, it’s natural to want to keep your budget slim. While cutting costs in some areas is smart, cutting malpractice insurance out of your budget can set you up for sizable problems down the road.

Even the most careful and diligent attorneys are likely to face malpractice claims at some point during their careers, and even claims that never result in a settlement or judgment for the plaintiff can be costly to defend against.


Legal claims are increasingly expensive.

The American Bar Association’s Profile of Legal Malpractice Claims 2012–2015 determined that both the cost of litigation and the size of payments have increased since 2011:

  • Claims ending with no judgment or settlement for payment dropped from 72.41% to 62.26% of claims filed.
  • Payments of $500,000 to $1 million increased nearly 400%—from 0.25% to 1.23%.
  • Payments in excess of $1 million increased 650%—from 0.08% to 0.6%
  • Evidence suggests that litigation costs have increased, spurring insurance companies to offer settlements earlier than in the past.[1]

Although claims that don’t yield a payment make up the majority of those filed, there can still be substantial costs and time involved in defending against these claims. The fact that litigation costs are on the rise means that even a frivolous claim could dramatically affect a firm’s financial picture.


You can’t entirely prevent malpractice claims.

As an earnest, hard-working attorney, you may be meticulous in your recordkeeping, research, discovery, planning, and other details of your practice. You may pride yourself on being a valuable resource for your clients, and you always have their best interest at heart. That should prevent you from getting sued, right?

Unfortunately, doing everything right is no guarantee against claims. It’s simply not possible to be sure to avoid every type of claim. Even a hack into your system that you take measures to prevent can expose you to liability for breaching client confidentiality, for example. 

Aside from such extreme examples, even the most careful attorneys make mistakes sometimes, and it’s unrealistic to think you can be the exception. On average, new attorneys can expect to face one to three malpractice claims throughout their careers, but some practice areas face higher rates of claims (and higher stakes for claims) than others.[2]


Adding coverage in the future won’t protect you from claims that arise today.

You may be hoping to get through the first months or year of your new practice without needing professional liability insurance, thinking that you’ll be covered soon enough, and then your worries will be over. That isn’t the case.

A professional liability policy covers only claims that arise from acts that occur during the coverage period. That means that if you make a mistake today that gives rise to a claim that your client files next year, the policy that you buy tomorrow won’t cover it. 

By skipping malpractice insurance to save money when you’re first starting out, you place what you’re working so hard to build—your business, your reputation, and your financial security—in jeopardy for years to come.


Protect your new firm.

When you open a new practice, it’s essential that you start out right. Don’t risk losing in the future everything you’re building now because you lacked professional liability insurance at a critical time. A small investment now will help protect your future flourishing firm and the income it will generate so the years of hard work you’ll spend building it can bring you all the rewards you deserve.

To discuss options for your attorney professional liability insurance and get a quote for your firm, contact ProDefender at (866) 434-8557 or


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[1] Laird. "ABA study suggests legal malpractice insurers are settling sooner." American Bar Association, 17 Oct 2016. Accessed 21 Sept 2017.

[2] Scott. "Attorney Malpractice Insurance: Who’s Got Your Back?" GPSolo. vol 31, no.1, Jan 2014. American Bar Association. Accessed 21 Sept 2017.

Topics: Lawyers Professional Liability, Attorney Professional Liability Insurance


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