If a current or former client believes you caused them financial losses due to negligent handling of their case, they may choose to file a legal malpractice claim against you. Fortunately, having professional liability insurance can protect you in these circumstances. Here are three reasons why you should report a legal malpractice claim to your insurance provider as soon as a client notifies you of their claim.
Reason #1: Protect Your Coverage
Most legal malpractice insurance policies take the form of “claims-made” policies. This means the policy extends coverage to a claim submitted to the insurance company during the policy period, regardless of whether the alleged malpractice occurred before the policy period. As a result, reporting a malpractice claim to your insurer as soon as a client notifies you of their claim will protect your right to coverage under your current policy. Waiting too long to report a claim risks losing coverage if you file your claim with the insurer after your insurance policy expires.
Furthermore, reporting a malpractice claim to your insurer as early as possible can also preserve your eligibility for coverage for defense costs. With your insurance coverage, you can hire legal counsel at an early stage of a malpractice claim, which may help you secure a favorable resolution to the claim more efficiently.
Reason #2: Strengthen Your Defense
Providing early notice of a legal malpractice claim to your insurer allows you to access coverage for defense costs, which can help you, your defense counsel, and your insurer investigate the claim while evidence and witness memories remain fresh. Defense counsel can also communicate with your client and their attorneys on your behalf and help you navigate challenging issues in defending yourself against a malpractice claim, such as maintaining attorney-client privilege.
A delayed notice of a malpractice claim can waste valuable time better spent on preparing a defense, risking the loss of critical evidence or allowing witnesses’ memories to fade. Ignoring the malpractice claim or trying to handle it yourself may also further damage your relationship with your client, potentially making it more challenging to obtain a favorable resolution to the claim. The sooner you get your legal malpractice insurer involved, the better your chance of a prompt, positive outcome.
Reason #3: Prevent Escalation and Financial Risk
Getting insurance coverage as soon as possible after receiving notice of a potential legal malpractice claim can help you prevent escalation of the claim to costly litigation. Involving your insurer at an early stage may facilitate a swift resolution of a legal malpractice claim, such as through a private settlement. Alternatively, waiting until a client files a lawsuit to report a malpractice claim can risk avoidable legal expenses and reputational damage caused by formal litigation.
Delayed reporting of a malpractice claim may also lead a client to file a complaint with the bar, potentially leading to disciplinary action that may have serious consequences for your career. As a result, prompt reporting can prevent a legal malpractice claim from escalating to a point where it threatens your professional reputation and financial interests through bar disciplinary proceedings or larger settlements or judgments in a legal malpractice lawsuit.
Contact WILMIC Today
If a current or former client has filed a legal malpractice claim against you, reporting it to your insurer as soon as possible can preserve your eligibility for coverage. Contact WILMIC today for an initial consultation with our staff to learn more about our malpractice insurance products and how they can protect your financial interests and reputation during a legal malpractice claim against you or your practice.