Legal Malpractice Insurance for Attorneys

Legal Malpractice Insurance

Legal malpractice insurance, also called attorney malpractice insurance, lawyer malpractice insurance, and lawyers professional liability insurance, protects law firms when clients claim errors, omissions, or negligence caused them financial harm. It covers defense costs and pays settlements or judgments up to policy limits.

How much does legal malpractice insurance cost? The cost of legal malpractice insurance ranges from $2,000 to $5,000+ per attorney annually. Costs fluctuate based on practice area, claims history, firm size, and location. Solo practitioners in low-risk areas may pay $800–$3,000. High-risk specialties like securities law or plaintiffs’ personal injury pay $7,500–$15,000+. The cost of lawyer malpractice insurance also increases significantly after a claim; one paid claim can raise premiums by 50–200%.

A single malpractice settlement can easily exceed $500,000. The same work that defines legal practice — deadlines, complex advice, adversarial matters — is the same work that creates significant malpractice exposure. Even the most diligent attorneys face claims.

Here’s what you need to know: how much coverage you need by firm size (from $1M for solo practitioners up to $10+ million for large firms), the real cost differences by practice area (securities law costs three to five times more than immigration), what clients and states actually require, and what you should expect to pay, including a real example of a year for a mid-size firm.

Whether you’re a small law firm with a few partners or running a 50-attorney firm, here’s how to manage risk by tailoring your professional liability insurance for your practice.

What Does Attorney Malpractice Insurance Cover?

Legal malpractice insurance—also called lawyers professional liability or E&O—protects you when a client claims you made a mistake, missed something, or gave bad advice. It covers the financial losses that define legal risk.

General liability covers slips and falls at your office. Malpractice insurance covers claims that your legal work cost a client money. It pays for your defense and covers settlements or judgments, up to your policy limits.

Most policies are claims-made. That means coverage only applies to claims made and reported while your policy is active—regardless of when the mistake happened. Let your coverage lapse, and you’re exposed for everything.

Core Coverage Areas:

• Missed deadlines or statute of limitations failures—the single most common claim type
• Inadequate research or case preparation
• Conflict of interest situations—representing adverse clients or missing conflict waivers
• Mistakes in documents or filings—a typo in a contract or missed detail in a closing
• Bad advice or missed warnings—wrong guidance or skipped risk disclosures
• Settlement mistakes—miscalculations or settling without proper client consent
• Breach of fiduciary duty claims
• Defense costs—covered even when allegations are unfounded

Additional Coverage Options:

Many policies go beyond the basics. You can add cyber coverage for data breaches, disciplinary proceeding defense, crisis expense coverage, subpoena response costs, and protection for lost client documents.

Common Exclusions:

Know what’s not covered. Most policies exclude fraud and criminal acts, business ventures outside legal work, fee disputes (unless tied to malpractice), claims you knew about before the policy, and sanctions or penalties.

Legal Malpractice Insurance Cost: What Affects Your Premium

Premiums vary dramatically based on your situation. Solo practitioners in lower-risk areas might pay $800–$3,000 annually. Moderate-risk practices typically pay $2,500–$6,000. High-risk practice areas run $7,500–$15,000 or more. Attorneys with recent claims can exceed $25,000 annually even for modest limits.

Key Rating Factors:

Practice Areas: The single biggest factor. Securities law, class actions, plaintiffs’ PI, real estate, and patent law generate the highest premiums. Immigration, appellate, and administrative law receive more favorable rates. Even small amounts of high-risk work significantly impact your overall premium.

Claims History: One paid claim can raise your premium 50 to 200 percent. Multiple claims? Coverage becomes hard to find. Five years claim-free helps offset past issues.

Years in Practice: New attorneys usually pay less upfront. Ten years with no claims? That’s the sweet spot—unless you’ve had a claim.

Geographic Location: California, Florida, New York, and Illinois attorneys face higher premiums. State regulations, jury verdict patterns, and litigation costs all affect pricing.

Coverage Limits and Deductibles: Common structures include $1M/$1M, $1M/$3M, and $2M/$2M. Moving from $1M to $2M per claim typically increases premium by 40–60 percent—not double. Higher deductibles reduce premiums: moving from $2,500 to $10,000 might cut annual premium by 15–25 percent.

Attorney Malpractice Insurance by Practice Area

Practice area is the single biggest driver of your premium. Here’s what each specialty faces:

Real Estate: High exposure from large transaction values, tight closing deadlines, and complex title issues. Common claims include title examination errors, closing documentation mistakes, escrow handling issues, and disclosure failures.

Family Law: Emotionally charged environments where dissatisfied clients readily blame their lawyer. High-risk areas include property valuation disputes, custody calculation errors, missed filing deadlines, and tax consequence mistakes.

Estate Planning & Probate: Unique long-tail exposure. Errors made today might not generate claims for 10–30 years when the client dies. Extended reporting coverage is critical for retirement planning.

Business & Corporate: Exposures from M&A due diligence failures, contract drafting errors, entity formation mistakes, and securities compliance issues.

Plaintiff Personal Injury: Statute of limitations issues are the most frequent and serious exposure. Settlement calculation errors and failure to obtain client consent create additional significant risk.

Immigration: Changing regulations, strict filing deadlines, and devastating consequences when errors affect clients’ ability to remain in or enter the United States.

Extended Reporting Period (Tail Coverage)

When you retire, close your practice, or switch carriers without prior acts protection, you need tail coverage. This endorsement allows you to report claims made after your policy ends for errors that occurred during the policy period.

Without tail coverage, you have zero protection for claims made after your policy expires—even if the error occurred while you were insured. Tail coverage typically costs 200–300 percent of your final annual premium for lifetime protection.

The alternative—prior acts coverage (“nose coverage”) from a new carrier—can sometimes eliminate the need for tail when switching carriers with continuous coverage history. But for retirement? Tail is essential.

Legal Malpractice Insurance Requirements by State

Only Oregon legally mandates coverage. But practical requirements vary significantly across jurisdictions.

Oregon

The only state requiring malpractice insurance. Active practitioners must maintain coverage through the Professional Liability Fund (PLF) or equivalent private coverage. Minimum: $300,000 per claim, $300,000 aggregate.

Disclosure States

Multiple states require attorneys to disclose insurance status to clients or bar associations. California, Ohio, Pennsylvania, New Hampshire, and others mandate disclosure. In California, you must tell every new client in writing if you lack coverage—a conversation that often costs you the engagement.

De Facto Requirements

Even without legal mandates, practical requirements make coverage essential. Corporate clients universally require proof. Panel counsel programs demand minimums of $1–2 million. Many partnership agreements require coverage. Bank financing often conditions approval on adequate insurance.

Consequences of Operating Uninsured:

• Client loss—sophisticated clients won’t engage uninsured attorneys
• Disclosure embarrassment—explaining to clients why you lack coverage
• Personal asset exposure—claims hit your savings, home equity, and future earnings
• Partnership exclusion—many firms won’t consider uninsured lateral candidates
• Panel removal—insurance carriers require coverage for their panel counsel

Louisiana

Only U.S. jurisdiction based on civil law, which creates unique malpractice exposure tied to codal interpretation and strict procedural rules.

No mandatory insurance requirement, but risk can be higher in areas involving obligations, successions, property, and prescriptive periods.

Consequences of operating uninsured:

• Lawyers are personally liable for judgments, meaning plaintiffs can pursue personal assets.
• Uncovered malpractice claims often lead to ethics complaints (competence, diligence, client protection).
• Many courts, insurers, and public entities won’t work with uninsured attorneys, limiting practice opportunities.
• A single claim—meritorious or not—can be financially devastating for solos and small firms.
• No disclosure rule, but market expectations make coverage a de facto requirement in many practice areas.

Building a Complete Law Firm Insurance Program

Malpractice insurance is the foundation, but law firms face risks beyond professional liability.

Cyber Liability Insurance

Law firms maintain extensive confidential client data—a prime target for hackers. Coverage includes breach response costs, notification expenses, credit monitoring, legal defense, and regulatory fines. Recommended limits: $1–2 million for most practices. Annual cost: $1,500–$4,000.

Employment Practices Liability (EPLI)

Covers claims from employees—discrimination, harassment, wrongful termination, wage issues. Law firms with associates and staff need this protection. Defending an employment claim averages $75,000+. Annual cost: $1,500–$3,500 for small to mid-size firms.

Business Owners Policy (BOP)

Bundles general liability and property coverage. Covers slip-and-falls at your office, property damage, and business interruption. Essential for any firm with physical office space. Annual cost: $1,500–$4,000.

Workers’ Compensation

Required in nearly every state once you hire employees. Covers medical expenses and wage replacement for work injuries. Law office rates are low—typically $0.50–$1.50 per $100 of payroll.

Commercial Umbrella

Adds excess coverage above your primary policies. Cost-effective protection—typically $1,000–$2,500 per year for $1–2 million additional limits.

Sample Insurance Program: Mid-Size Law Firm

Firm Profile: 8 attorneys (4 partners, 4 associates) • $2.5 million annual revenue • $800,000 annual payroll • Mixed practice: corporate, real estate, litigation • Single office location

Legal Malpractice Insurance Cost Management Strategies

Maintain Proper Intake and Conflict Systems: Documented systems for client intake, conflict checking, and calendar management show carriers you run a tight operation. Many offer premium credits for comprehensive risk management programs.

Keep a Clean Claims History: Your claims history is your best tool for lower premiums. Five years claim-free can reduce rates by 20–40 percent compared to standard pricing.

Use Appropriate Limits and Deductibles: Don’t over-insure for your practice size. And consider higher deductibles—moving from $5,000 to $15,000 might cut premiums 15–20 percent if you can handle the out-of-pocket.

Bundle Coverages: Package multiple policies with one carrier for discounts of 10–20 percent. Malpractice plus cyber plus BOP often qualifies.

Complete Carrier Risk Management Programs: Many carriers offer premium credits for completing their risk management courses. ALPS, CNA, and others provide 5–10 percent discounts for participation.

Shop the Market Regularly: Carrier appetite changes. Shopping every 2–3 years ensures you’re not overpaying. An independent broker can access multiple markets without you doing the legwork.

How to Choose a Legal Malpractice Insurance Broker

Law firms require brokers with specific qualifications:

• Work with brokers who specialize in professional liability and place coverage for firms like yours. General commercial brokers rarely understand the nuances of legal malpractice.
• Ensure your broker has access to all major legal malpractice markets—ALPS, CNA, Travelers, Liberty, Chubb, and state bar programs. Limited market access means limited options.
• Multi-state practice? Your broker needs licensing in every jurisdiction you operate. That means compliant coverage and fast certificates.
• Demand claims advocacy, not just policy placement. When claims arise, you need a broker who fights for coverage on your behalf.

Red Flags When Choosing a Legal Insurance Broker:

• No experience with law firm clients
• Limited carrier access—only one or two markets
• Slow response times during the quoting process
• Pricing significantly below market (usually missing critical coverage)
• Carriers rated below A- (financial stability concern)
• No claims support or advocacy after placement

Why Choose Alliance Risk for Legal Malpractice Insurance

Legal Liability Specialists: Our experience working with law firms across all 50 states means we understand the exposures facing legal professionals. We know which coverage features matter for different practice areas and how to structure protection programs.

Independent Broker Advantage: We maintain relationships with all major legal malpractice carriers—ALPS, Travelers, CNA, Liberty Mutual, Chubb, and state bar programs. We compare multiple options to find the best coverage and pricing, representing your interests rather than any carrier’s.

Claims Advocacy: When claims arise, we advocate for you throughout the process. We help you navigate carrier requirements, understand coverage implications, and resolve issues. Our support extends beyond placement.

Complete Coverage Programs: Beyond professional liability, we help law firms secure cyber liability, EPLI, commercial property, general liability, workers’ compensation, and umbrella coverage—all coordinated for seamless protection.

Fast Turnaround: Need a quote? We deliver proposals within 1–2 business days. Certificates? Standard 24-hour turnaround with same-day service when you need it.

Legal Malpractice Insurance FAQ

Is legal malpractice insurance required?

Only Oregon legally requires coverage. However, corporate clients, panel counsel programs, partnership agreements, and bank financing often make it effectively mandatory. Several states require disclosure to clients when attorneys lack insurance.

What’s the difference between claims-made and occurrence coverage?

Claims-made policies respond when the claim is first made and reported during the policy period. Occurrence policies respond based on when the error occurred. Most legal malpractice policies use claims-made coverage due to the long gap between errors and claims.

Do I need tail coverage as a newly retired attorney?

Yes. Without tail coverage, you have no protection for claims made after policy expiration—even for errors during the policy period. Most attorneys purchase lifetime tail coverage, typically costing 200–300 percent of the final annual premium.

Does attorney malpractice insurance cover contract attorneys or of counsel?

Coverage depends on your specific policy terms. Most policies cover work performed by contractors under your supervision on your matters. Review your policy with us to ensure all attorney relationships are properly insured.

Does lawyers professional liability include cyber liability?

Some policies include limited cyber coverage, but separate cyber insurance policies are recommended because they provide broader protection for data breaches, ransomware, and other incidents. Law firms maintain extensive confidential client information, making standalone cyber coverage increasingly essential.

Get Your Legal Malpractice Risk Review

Protecting your law firm shouldn’t be complicated. Alliance Risk provides a comprehensive review of your current insurance program and subsequently markets your risk to the right legal malpractice carriers, delivering comprehensive proposals typically within a few business days.

What We Need for Your Quote:

• Firm details and ownership structure
• Attorney count and years of experience
• Practice areas and percentage breakdown
• Operating states
• Current coverage and limits
• 5-year claims history

Schedule a Consultation: Speak with a legal insurance specialist about your specific situation—at no cost.

Policy Review: Already have coverage? We’ll review your existing policies at no charge, identifying potential gaps and comparing to market options.

Request a Quote: Complete our online form or contact us directly to begin the quote process.

Want coverage built for your law firm? Let’s talk.

Alliance Risk — Your specialized partner for law firm insurance.