It is estimated by the American Bar Association that 5 to 6 percent of all private attorneys face a legal malpractice claim each year. It is further estimated that the cost of litigation is far greater than the cost of legal malpractice insurance. While Connecticut is one of a majority of states that do not require attorneys to have legal malpractice insurance (and still one of about half of all states where attorneys do not yet have to disclose to clients whether they have malpractice insurance), the statistics on costs make it clear that every attorney should investigate and obtain legal malpractice insurance. At the end of the day, depending on the claims and type of law involved, a legal malpractice claim can be devastating to you and your practice. The best protection is to have legal malpractice insurance.

There are many variables to explore when obtaining a legal malpractice insurance policy, as with most any type of insurance. The amount of coverage should be linked to the areas of practice in which your firm engages, as well as the number of cases you handle. Some areas of law, including intellectual property, securities, trusts and estate law, medical malpractice and personal injury, lend themselves to much greater exposure than other areas. This is a pertinent consideration in amount of coverage. Another consideration is the cost of defense and litigation. It can easily cost hundreds of thousands of dollars to try a legal malpractice case to verdict. This should factor in to, not only the amount of insurance you consider, but also your deductible. The cost of defending a lawsuit may be counted against your total limits in your policy.

Different types of policies are available: Claims-made policies and occurrence-based policies. While the difference may be obvious to many attorneys, there have been instances where a failure to understand the type of policy resulted in the insurance company disclaiming coverage. A claims-made policy covers claims made during the policy period. An occurrence-based policy protects the insured from damages resulting from acts occurring during the policy period, with less focus on when the claim is brought. Failing to understand the type of policy you have—or when your coverage period begins or ends—may result in a denial of coverage. (See Itc Invs. v. Employers Reinsurance Corp., 2000 Conn. Super. LEXIS 3544, *16, 2000 WL 1996233 (Conn. Super. Ct. Dec. 11, 2000)). With a claims-made policy, even though there is coverage for claims made within the policy dates, there can be exclusion language that excludes claims that have arisen before a certain date. It is essential to read the policy language and know precisely what you are getting.