What is LPL?
Lawyers Professional Liability insurance coverage. This type of coverage is also commonly referred to as malpractice insurance, errors & omissions insurance, or E&O.
Do I need liability coverage?
Claims arising from pro bono activities are very rare, and most states do not require an attorney to have liability insurance in order to practice law. However, insurance coverage can give you peace of mind knowing there is a safety net should a mistake be made or a claim asserted against you – regardless of whether it has merit. Additionally, employers may be more comfortable with having themselves and their employees covered for that rare event.
I am volunteering through a legal services provider or a bar association, do I need my own coverage?
Check with the provider or association for details. Many organizations already have coverage that may extend to attorneys who take pro bono cases or give advice through the organization.
I already have a policy, am I covered?
Check with your carrier and review the terms under your insuring agreement along with any endorsements.
For policies issued by Lawyers Mutual, claims arising from pro bono activities are covered just as a claim for a paying client would be, subject to the terms and conditions of your policy.
Are there any special policy benefits to consider?
There may be. Some providers offer additional benefits for pro bono work should a claim arise. Check with your provider for more information.
For policies issued by Lawyers Mutual after August 1, 2015, there is a limited waiver of deductible up to $10,000 for claims expenses on pro bono matters handled through many legal service providers.
I do not have a policy, what are my options?
First, check to see if the legal service provider you are working through has coverage that would include your pro bono work as well.
Next, check with your employer to see if it has a policy that may cover your pro bono work.
If coverage does not already exist, or if you are interested in additional coverage, here are a few possible options:
- Obtain a stand-alone policy for your pro bono work.
- Talk with your employer about adding an endorsement on to its existing policies.
- Talk with your employer about obtaining a policy to cover you and all other attorneys in the organization for pro bono activities.
What is Claims-Made Coverage?
Across most professions, professional liability coverage is issued on the “claims made” basis. This method of providing coverage differs from the more familiar “occurrence” basis like automobile or homeowner’s insurance.
Under claims-made coverage, it is the policy in effect at the time the claim is made against the insured – not the time the act/omission occurs – that responds to the claim. There is also an additional condition with this type of coverage — the alleged act/error/omission must have occurred within the attorney’s “prior acts” or “retroactive” period.
What are “Prior Acts”?
The prior acts or retroactive date is usually defined in the policy and may be on the declarations page or on an attorney listing endorsement attached to the policy. This date is generally the first date the attorney was covered by the policy.
The prior acts or retroactive period is the time between that date and the current date. If there is a gap in coverage, this period may be lost since claims-made coverage relies on maintaining continuous insurance coverage.
How much would coverage cost me?
It depends on the type of coverage you currently have and what additional coverage is needed. If you or your employer already have your own policy and pro bono work is covered, then the additional cost is $0. If you wanted to obtain an individual policy solely for pro bono work and have requested limits of liability up to $1 million, then the initial pricing would likely be below $500 for the year.
Your employer may have the option of adding an endorsement to its existing liability policies for a small additional fee. Have your employer check with the company’s agent to determine availability and pricing.
If your employer is interested in obtaining stand-alone coverage for the attorneys at the company, then an Employed Lawyer policy would be the appropriate way to go. Generally, costs would be below $2,000 per year for most employers for solely pro bono work, but the pricing varies by carrier and program.
Why should I pay for insurance to work for free?
While cost is certainly a concern and consideration, it should not be a barrier to providing pro bono services. The benefits in terms of social goodwill, the possibility of future paying clients, fulfilling your professional responsibility to the community, and the personal rewards realized from these actions have a tremendous value. Partnering with an insurance carrier to ensure coverage will allow you further peace of mind that should an issue arise, you have taken the appropriate steps to be covered.
Additionally, many carriers offer other benefits such as free advice, free or reduced cost Continuing Legal Education, reference materials, library resources, and policyholder dividends that can reduce the net impact of the premium on your overall budget.
If I get my own policy, what happens when I no longer need it?
Claims-made coverage requires an in-force policy for acts/errors/omissions to be covered, so it is common to inquire about what happens when a policy is no longer needed.
Tail Coverage, which has the formal name “Extended Reporting Endorsement,” or “ERE” for short, is the solution. As the name implies, it is an endorsement that attaches to the last in-force policy and extends the time period for reporting a claim under that policy for an additional period of years. It has an additional cost, but it is usually a one-time payment even if you choose an option that lasts for many years. This will not cover anything that happens after the ERE goes into effect, it only extends the time to report claims that otherwise would have been covered by the last policy.
Lawyers Mutual offers two options: 4-years, which corresponds to the Statute of Repose for legal malpractice in North Carolina; and an Unlimited-time option.
Where can I find more information on professional liability insurance?
- Ask the pro bono legal services provider.
- Contact your local State Bar or Bar Association.
- Talk with attorneys in your community.
- Visit the American Bar Association’s Standing Committee on Lawyer’s Professional Liability: http://www.americanbar.org/groups/lawyers_professional_liability.html
- Contact Lawyers Mutual – www.lawyersmutualnc.com
Special thanks to Lawyers Mutual Insurance Company for helping prepare this information.