This is the reason for the lawyer’s professional liability insurance coverage
Studies indicate that professional liability claims against attorneys are on the rise dramatically. Reasons for lawsuits run the gamut of associated allegations, from unintentional errors to failure to fully address client concerns, conflict of interest, and actual breach of fiduciary duty.
It is understandable, of course, that having insurance protection is something that all attorneys and law firms should have in place.
Read on for lawyer professional liability insurance claim scenarios.
An attorney’s firm filed an eleven-count complaint on behalf of its client. Later, the action was dismissed. The client turned around and sued the law firm for malicious prosecution. The legal firm was not overly concerned because it was clear that the plaintiff could not be successful in all aspects of the case. This is why he went ahead with a defense. To the chagrin of the law firm, the wealthy plaintiff intended to harm them. Therefore, he decided to take the case to the courts of first instance and of appeal, which resulted in payments of more than $ 1 million for the defense of the insurance company.
Legal negligence / Legal error
A legal company filed a bad faith complaint against an insurance provider on behalf of some homeowners. The lawsuit concerned complaints about the insurance company’s denial of claims related to water damage and mold. The law firm helped facilitate a settlement that awarded $ 190,000 to the owners. After the settlement, the owners filed a $ 635,000 lawsuit against the law firm regarding legal negligence for allegedly taking too long to file the original complaint, as well as for what they claimed were serious professional errors. The owners said they were forced into the settlement, something that left with a reward less than full value as a result of a weakened case. The law firm’s insurance paid approximately $ 100,000 in defense costs that ended up resulting in a $ 120,000 settlement.
Negligence or breach of contract and fiduciary duty
A law firm was assigned to defend the individuals from a lawsuit for embezzlement of family funds. After all parties to the claim decided to list the family home at fair market value, the lawsuit was dismissed. 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. Previous clients claimed that they had been misled regarding the sale of the family property. They demanded payment of several hundred thousand dollars due to the escalating real estate market. Before the jury selection, the plaintiffs determined that it was in their interest to terminate the lawsuit. Currently, the plaintiffs have requested an appeal. Law firm insurance covered around $ 200,000 in defense as of now in this ongoing saga.