The practice of law has evolved dramatically over the last 30 years. Technological advances, coupled with the growth of lateral hires and multifaceted areas of practice have contributed to an increase in both claim complexity and severity.
According to a recent study by Ames & Gough, an industry-focused specialty insurance brokerage, nine insurers surveyed unanimously experienced an increase in the cost to defend legal malpractice claims citing claim complexity as a clear driver of this trend. Eight insurers indicated the average costs to defend a typical malpractice claim exceed $50,000; three saw costs between $100,000 and $500,000, and two indicated average costs are more than $500,000. The nine insurance companies polled, on a combined basis, provide insurance to approximately 80 percent of the Am Law 100 firms.
So policy limits that would suffice three decades ago may not be adequate to cover the defense costs required to defend today’s legal malpractice claims. Inadequate limits could leave a firm at risk of exposure above its policy limits. If a firm fails to purchase the appropriate amount of professional liability coverage, it could put both personal assets and the firm’s assets at risk.
“The potentially substantial cost of malpractice claims underscores the need for law firms to give careful consideration to the professional liability insurance limits they purchase,” Eileen Garczynski, senior vice president and partner, Ames & Gough noted in the study. “At the end of the day, when a large claim occurs your firm needs to make sure it has adequate financial protection.”
On average, to increase policy limits from $100K/$300K to $250K/$500K costs only 40% more in premium but provides 250% more in additional coverage.
For more information on the 2018 Ames & Gough Legal Malpractice Survey please visit www.amesgough.com/2018-lpl-insurer-survey
All premium amounts quoted on this page are for illustration purposes only. Premiums are subject to individual underwriting and approval. Attorney Protective is a MedPro Group/Berkshire Hathaway company that protects the reputations and assets of attorneys across the nation. All insurance products are administered by Attorney Protective and underwritten by National Liability & Fire Insurance Company, AttPro RRG Reciprocal Risk Retention Group or Nationa lFire & Marine Insurance Company – each of which has earned anA ++ financial strength rating from A.M. Best. Product availabitliy is based upon business and/or regulatory approval and may differ among companies.
Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080