It’s perhaps easiest to start with the one thing not to do when a client threatens to sue you: ignore them. Although a threat is a long way from an actual lawsuit, taking the threat seriously will allow you to prepare for whatever may follow.
Topics: Lawyers Professional Liability
For many small firms or solo practitioners, survival depends on taking a diverse array of cases rather than focusing on one narrow practice area.
Practicing a new area of law, however, not only broadens your experience but can also increase your risk.
Errors and omissions insurance (also called professional liability insurance or malpractice insurance) can help you expand into new areas of practice with confidence.
You may feel like your practice is at low risk of facing a lawsuit, so you don't need malpractice insurance. But a lawyers professional liability policy covers more than the cost of settling a lawsuit or paying a judgment—it provides you with assistance in a variety of difficult situations as well as helping you avoid malpractice claims altogether.
If you’re a young lawyer hanging out your shingle for the first time, you know that very penny counts. For that reason, you may be evaluating whether you should spend the money for professional liability insurance. New lawyers or lawyers starting a firm may think the small cases they will handle in their first few years do not justify the cost of paying for malpractice insurance (also known as “errors and omissions" or "E&O" insurance). Or they may think that if they have very few assets (and very big debts), they won’t get sued if they don’t carry insurance.
Here’s why this philosophy is misguided—and why getting E&O insurance immediately is the best thing new attorneys can do for their practice.