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    Should You Invest In a Malpractice Policy?

    In my seminars, people always ask me about malpractice insurance. I say it’s a must – and don’t allow any contractors into my own office until they are insured.

    Let’s talk about the benefits of insurance. First, you get the peace of mind that you are prepared for something that will most likely happen sooner or later, and will certainly be expensive. Second, your state bar may actually require you to be insured, so check their rules. Finally, your own insurance is another selling point for hiring you - it communicates to your prospective attorney-client that you take risk seriously, and you feel responsible for mitigating it.

    So, I believe that every freelancer should have his or her own policy. Yet, this is the most frequently sited objection: “But my attorney-clients will have insurance that covers independent contractors that work for her firm.” In reality – that may or may not be true.

    Insurance products are complicated, numerous, and the only thing you can assume about all of them at once is that they are not free. Take Lawyer’s Mutual Strong Start policy. It explicitly does NOT cover any other attorneys (employees or independent contractor) besides the insured attorney. How do I know? I read my policy.

    What does that mean? Well, it means that you’ll be happily practicing law for a month, or a year, or ten years, until you get sued. And once you get sued, your panicking attorney client will call her insurance company, only to learn that you’re not covered.

    The only way to avoid that disaster, should you chose to rely on your attorney client’s policy, is to read it and call the insurance company to verify that you are indeed covered (and do this with every firm you contract for – one firm’s policy will NOT cover your contract work at another firm). When you call, make sure to find out exactly what roles of yours will be covered. For example, the existing policy may cover you as a contractor, but not as an employee. When six months later you’ll be offered that full time job, you won’t think about insurance because “you’re already past that,” but your changed status with the firm will have put you in violation of the agreement.

    The easier way, in my opinion, is to invest in your own policy, guaranteed to cover any and all of your activity as a lawyer. I myself am a longtime client of Lawyer’s Mutual, and have found them to be flexible, easy to apply for, and affordable. Their Strong Start policy provides all the coverage you’ll need as a contractor, or as a solo practitioner, starts at $50 a month, and is available to attorneys who have been practicing for less than three years. You have to be a new attorney to qualify, but you never get kicked out. Your premiums will go up every year, but will be capped at a very reasonable level.

    I imagine that LMIC’s "Independent Contractor policy" is an affordable option for more experienced attorneys.

    In short, affordable policies exist and are a wise investment – you don’t want to be refinancing your house to cover your defense.   

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