Not All Lawyers Have Malpractice Insurance
Many clients are surprised to discover that in California, lawyers are not mandated by the State Bar Act or the California Rules of Professional Conduct to carry legal malpractice insurance. Insurance is required only in a handful of states like Oregon and Idaho.
Does My Lawyer Have Insurance?
Under California Rule of Professional Conduct 1.4.2, lawyers who lack professional liability insurance must disclose this fact in writing to clients at the outset of their engagement. Typically, this disclosure is included in the fee agreement or retainer contract. Clients can refer back to these documents to confirm if such disclosure was made under Rule 1.4.2.
According to a recent Court of Appeal case, Hance v. Super Store Industries (2020) 44 Cal.App.5th 676, failure to comply with Rule 1.4.2 could potentially render the engagement agreement void, complicating the lawyer’s ability to receive payment for services rendered.
Do Most Lawyers Have Malpractice Insurance?
Fortunately, the majority of lawyers in California carry malpractice insurance. Various studies indicate that approximately 7% of lawyers handling civil cases (as opposed to criminal matters) do not have malpractice coverage. This minority is primarily comprised of solo practitioners and attorneys from small firms, with estimates suggesting that 30-40% of solo practitioners lack coverage.
What Is Covered by Malpractice Insurance?
In general, malpractice insurance provides coverage for negligence on the part of a lawyer. This typically includes errors such as missed deadlines, failure to make critical legal arguments, providing incorrect legal advice, or miscalculating damages.
However, it is equally important to understand what is not covered. Malpractice insurance does not extend to intentional acts such as theft, fraud, or deliberate overbilling. In such cases, the insurance company is unlikely to provide coverage. A knowledgeable legal malpractice attorney can help clients navigate these nuances and maximize their chances of securing coverage.
If you have questions about the scope of coverage or are unsure about potential claims, you should to consult with an experienced legal malpractice attorney.