Whether you are an independent insurance agent trying to decide what type of attorney insurance to sell or a lawyer determining the type of insurance you need, it is savvy to consider legal malpractice insurance. As with all other types of insurance, malpractice insurance can save a significant of money and give lawyers peace of mind.
What Is Legal Malpractice Insurance?
Legal malpractice insurance protects lawyers from mistakes they make, specifically from the lawsuits that a client may bring against them if their mistakes or lack of oversight cause damage. This insurance is a specialized form of lawyers’ professional liability insurance. Most policies cover legal fees as well as settlements, although that can vary.
A policy may cover many situations, including misrepresentation, violations of good faith, and damages from a lawyer’s actions. Each policy is unique, so those buying and selling legal malpractice insurance should ensure the policy provides the lawyer’s coverage.
Is It Worth it to Sell Legal Malpractice Insurance? (Yes)
The short answer is yes, it is worth it to sell legal malpractice insurance. Take a look at some of the reasons this is the case.
1. All Lawyers Need It
One of the best reasons to sell legal malpractice insurance is that all lawyers should have it. With 1.33 million lawyers in the U.S. as of 2020, this means that you will have a very large market to which you can sell this type of insurance.
That large number of sales opportunities directly translates into potential profits.
2. More Cross-Marketing Opportunities
Any independent insurance agent knows that selling one client multiple policies is a great way to increase your income while also ensuring that each of your clients has everything they need. As a bonus, you get to spend less time chasing leads since you already converted them. Offering insurance for attorneys gives you even more of these cross-marketing opportunities.
3. Provide Valuable Assistance, Which Clients Will Appreciate
As an independent insurance agent, you do more than just sell insurance. You also build relationships with your clients and provide advice based on their situations. Offering legal malpractice insurance gives you yet another way of doing this, which your clients will appreciate. Remember that happy clients come back for future sales and refer new clients.
In this case, the advice comes from helping lawyers find the policy that fits their needs and budget. You will be more familiar with the wording of insurance policies than them so that they will appreciate your advice.
4. Selling It Is Just Like Selling Other Policies
If you decide to sell legal malpractice insurance, there will not be a steep learning curve. Yes, you will need to familiarize yourself with the various policies and regulations regarding them, but you can use the same techniques to sell this policy to lawyers as you would when selling any policy to any other client, whether it is home insurance or health insurance.
5. Many Policies Come from the Same Major Companies
Many of the insurance companies that you already sell policies from likely offer legal malpractice insurance. This can save you time and effort, as you may not even need to register as an agent for another insurance company to start offering attorney insurance.
How Legal Malpractice Insurance Benefits Lawyers
Legal malpractice insurance is a wise investment for your law firm due to all its benefits for attorneys.
- Protection of Your Assets, Including Your Firm
In the case of a larger lawsuit, there is a risk that the costs could be very high without insurance. They can even lead to bankruptcy, causing you to lose your assets, both professional and personal.
However, with legal malpractice insurance, the policy will cover at least a significant portion of the costs, saving you thousands of dollars or more. Even more importantly, with professional liability insurance as a sole proprietor, your personal assets will always be protected in a lawsuit against your legal firm.
- Covers the Costs of the Claim
Even if you face a claim that has no merit, you will likely have to spend significant time, money, and energy fighting it. This will result in lost earnings since you will have to dedicate at least some energy to your case.
With malpractice coverage, you no longer have to worry about this. Many policies include compensation for any income lost when dealing with the claim.
- Protection of Your Reputation
A malpractice lawsuit is not only a financial problem, as it may also hurt the reputation of your law firm. Most legal malpractice insurance policies will also help with this by covering the expenses related to hiring a public relations firm to repair and maintain your reputation.
Without this attorneys’ insurance, you would have to either deal with the loss of reputation and lose business or pay for this reputation management out of pocket.
- Improves the Confidence of Your Clients
Although clients hope they never have to make a claim against you for malpractice, most will feel peace of mind knowing that you have this type of insurance coverage. After all, it helps ensure that if something does happen, they will want fiar compensation.
- The Bar Association Recommends It
To round out all of the other reasons to consider legal malpractice insurance, the American Bar Association suggests that you have it, even if you only work as an attorney part-time.
Whether you are the buyer or the seller, it is worth investing money and time into legal malpractice insurance. Buyers can benefit from the financial protection that the policy includes while helping with direct costs of claims, let alone enhancing reputation management. Sellers can benefit from having a larger portfolio of products to sell in turn, providing better service to their clients.