Every year, attorneys across Washington tackle renewing their malpractice insurance. In October, to my dismay, I noted that my firm’s annual premium increased approximately 21%. Why? I was told that, across the board, the cost of malpractice insurance has increased for law firms practicing in estate planning and probate due to increased claims in this area.
In Washington, attorneys are not required to carry malpractice insurance. But they are required to report annually to the Washington State Bar Association (WSBA) regarding the details of their insurance coverage. The WSBA’s website provides a link to the general public, so anyone can look up an attorney who is licensed to practice in our state and determine the status of that attorney’s license and whether or not that lawyer has malpractice insurance coverage.
Let’s say ABC Law Firm represents Charlie Client and makes a mistake. And, that error causes Charlie to be harmed to the tune of $500,000. How does Charlie resolve the issue? If the matter can’t be settled, then Charlie will likely file a lawsuit against ABC Law Firm for legal malpractice. The general public assumes that law firms and lawyers have oodles of money. That’s often not the case. Suppose ABC Law Firm consists of two attorneys, who both recently graduated from law school and have a combined student loan debt of $450,000. Each attorney lives in a studio apartment in the U-District and has no assets to speak of. Since malpractice insurance tends to be quite pricey, these two newly minted lawyers decided to forego obtaining insurance until their firm becomes more profitable. ABC Law Firm couldn’t afford a verdict for $10,000, much less $500,000. So in reality, Charlie is probably out of luck and will have no options to recover for his loss.
This is why malpractice insurance matters. It’s not just to protect the lawyer – it’s to protect you, the client.
Although I would, of course, prefer not to pay the 21% increase on my firm’s already expensive malpractice coverage, I wrote the check. Whenever you choose an attorney to work with you, I recommend that you review the WSBA’s website to make sure that attorney has a valid license to practice law and carries malpractice insurance. Additionally, if you are creating your legal documents by use of some online form factory such as LegalZoom, RocketLawyer, or Nolo, you will be even worse off than if you selected the attorney with no malpractice coverage. You cannot sue these companies for malpractice since they claim not to be practicing law. If a mistake is made (and there’s an excellent chance of that happening!), you in all likelihood will be completely on your own to deal with, and pay for, the mess that will ensue. On the other hand, if you hire a licensed attorney with malpractice insurance coverage, you’ll have the confidence of knowing your work will be done correctly, and a way to be reimbursed for any damages suffered in the unlikely event of an error.
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