Common E&O claims attorneys face.
As an attorney, providing professional services in today’s increasingly litigious environment, you could easily be sued by a disgruntled client who may feel they’ve suffered a loss due to your actions or inactions. Whether the mistake is actual or alleged, E&O claims against attorneys can amount to large financial losses and potential reputational damage.
Fortunately, errors and omissions (E&O) insurance provides law firms with a safety net to cover costs associated with lawsuits related to their professional services. E&O insurance helps protect attorneys from claims of:
Inaccurate, erroneous, incomplete, or misleading advice is a frequent basis of claims for errors and omissions insurance. Clients expect their lawyers to have extensive knowledge in their area of practice. Understanding the law and using it to guide the client is crucial to the success of any case. If a client takes an attorney’s advice and then suffers some sort of loss as a direct result, the client could file an E&O claim against the attorney.
A lawyer is expected to conduct a thorough investigation and uncover all relevant information related to a case. They have to put in the proper amount of time and effort investigating all relevant facts, request necessary information, and even find witnesses to properly handle a case. If a lawyer fails to discover all facts that are important to a case due to inadequate discovery, they could be subject to E&O claims.
For instance, an attorney failing to uncover all financial assets of the spouses during a divorce case can be termed as inadequate discovery. The attorney may be liable for errors and omissions if they advised the client to settle the case without adequate discovery. If the client sued the attorney after learning they had received misleading settlement advice, the claim may be covered under the attorney’s E&O policy.
Failure to Meet Deadlines
Cases of missed deadlines in the legal profession almost always stem from the failure to file paperwork on time. There are several deadlines that need to be met at different stages throughout the legal process. Missing any deadlines can result in serious repercussions for a client and, in turn, the attorney. When a lawyer fails to file documents on time, the case can be thrown out of court entirely and in some cases, the client ends up losing significant amounts of money.
Another common reason for E&O claims that’s related to deadlines is referred to as “failure to calendar.” This involves the attorney failing to meet a deadline to file a suit or just take action in a case. Failing to calendar can lead to missing documents, missed hearings, and sometimes, a default judgment against a client.
For example, in personal injury cases, there are statutes of limitations that dictate how much time a client has to file a lawsuit. Failure to file the necessary paperwork before the expiration of the statute of limitations may leave your client with valid E&O claims against you.
Breach of Contract
The attorney-client relationship often starts with a written representation agreement. These contracts set out the fees that the client will owe, responsibility for court fees, the terms of the attorney-client relationship, and highlight who will work on the case. The contract may also contain deadlines and promised professional services.
If you fail to deliver on any promises under the terms of a written representation agreement for any reason, you could easily have an E&O claim on your hands. The client can hold you liable for losses resulting from your failure to deliver what was agreed upon. Mistakes and misunderstandings do happen, but you can turn to your E&O coverage to avoid hefty fees from defense costs and settlements.
Breach of Fiduciary Duty
The relationship between an attorney and a client is fiduciary in nature. The fiduciary duty requires undivided loyalty, care, diligence, and transparency on the part of the attorney. When a fiduciary duty exists, the lawyer is held to a high standard of honesty and full disclosure and must act in the best interests of the client.
A claim alleging a breach of fiduciary duty arises when an attorney acts in a manner adverse or contrary to the client’s interest, or from improperly benefiting from the representation of a client.
For example, the attorney may improperly retain the client’s funds, fail to disclose conflicts of interest, improperly use client confidences, engage in self-dealing, take advantage of the client’s trust, make misrepresentations to the client, or have a personal relationship with the opposing client or attorney. E&O claims alleging breach of fiduciary duty may derive from an intentional or negligent act.
The Value of E&O Insurance for Attorneys
Regardless of the reasons behind E&O claims, having errors and omission insurance coverage can save you from expensive legal battles and give you peace of mind. With errors and omissions coverage, you can make sure the dissatisfaction of a client isn’t the downfall of your law firm. If a client files a claim against your firm, E&O insurance can pay out to cover:
- Defense costs
- Court costs
- Administrative costs
- Settlements or judgments
E&O does not provide coverage for lawsuits related to employment, bodily injury, or property damage.
Protect Your Law Firm with an E&O Policy from Attorneys First Insurance
At Attorneys First Insurance, we understand the unique needs of professionals in the legal industry and are here to help you get the coverage you need with no waste or extra expense. We offer comprehensive coverage at considerably lower rates than other providers. Contact us today to get a quick quote.