In the marketplace of legal malpractice insurance big law firms may be at an advantage when some insurance companies offer rate reductions for a greater number of attorneys. Law firm malpractice insurance costs may be further reduced with incentive programs, such as rewarding firms that institute malpractice prevention controls. Large law firms have two added major considerations that smaller firms or solo practitioners may be less concerned about when acquiring malpractice insurance.
First, the question of who is covered by the policy becomes more complicated with larger firms. A firm will want to consider coverage for former, current, and future lawyers, directors, officers, shareholders, non-attorney employees, attorneys “Of Counsel”, independent contractors, and heirs, assigns or legal representatives of the insured, among others. Most firms will want to craft a far-reaching definition of the “Named Insured” to cover all past and current attorneys at the very least. An additional question for a firm is whether the policy will cover services performed by employees, but not on behalf of the firm.
Second, a firm will want to ensure that all of their practice areas are covered in all jurisdictions and geographic areas practiced. For large firms that practice in multiple states in multiple practice areas that may be high risk areas of practice (e.g. banking and securities), all of these factors will affect the insurance underwriter’s risk analysis, rate quote, and specific policy and coverage terms.
Law firm malpractice insurance is a necessary business cost for large firms. With numerous attorneys practicing in multiple practice areas margins of error, and ergo, liability, increase. However, with pooled risk comes reward, and large firms can now increasingly save with bundled malpractice insurance.