Wednesday, 26 October 2011

Malpractice Insurance and Legal Process Outsourcing

This issue was discussed with brevity in the last article posted. The article collectively dealt with seven myths in the Legal Outsourcing Industry. However a need was felt to exhaustively deal with this issue of malpractice insurance, hence the article. What is Insurance? Insurance is an agreement (generally in standard form) between the policy holder and the insurer, where the insurer agrees to indemnify the policy holder upon the occurrence of a contingent event. In the absence or lapse of insurance, the wrongdoer is personally liable to compensate the alleged victim. What is Malpractice Insurance and what does it cover? Malpractice Insurance is one category of insurance, specifically meant for professional practitioners like physicians, lawyers, accountants etc., which provides coverage to these policyholders against potential negligence claim made by their clients/patients. The malpractice insurance taken by attorneys is popularly known as legal malpractice insurance. Legal malpractice is defined as the failure of an attorney to deliver competent services to his client. If the latter is harmed by the failure of the attorney, then he can pursue a claim for legal malpractice. This insurance generally covers defense costs, deposition representation, defendant expenses, license protection, and any liability occurrences. Some also offer the coverage of assaults, personal liability, personal injury, first aid expenses, medical payments, and damage to the property of others depending upon the scope of agreement. Malpractice Insurance is a general liability insurance. Who are covered under a Legal Malpractice Insurance? By the doctrine of respondent superior and vicarious liability, the employer is responsible for the torts of their employees or agents when the wrongdoing occurs within the scope of employment. Under the same principle, in case if a paralegal or junior associate commits a tort within the scope of employment, the client can sue the paralegal, the associate, the attorney or all. This is a reason why most of the legal malpractice insurance covers each and all of them.

Is it mandatory for the US Attorneys’ to have legal malpractice insurance? Oregon is currently the only state to have a mandatory program requiring all private practice attorneys to carry malpractice insurance. Four states – Alaska, Ohio, South Dakota and Virginia – have varying requirements for disclosure of professional liability coverage. The Supreme Court of California adopted new Rule of Professional Conduct 3-410 on August 26, 2009, effective from January 1, 2010. This Rule 3-410 requires lawyers without professional liability insurance to provide written disclosure of their lack of coverage to all, i.e. to both the new clients as well as the clients which return to the attorney with new assignments. The mandatory disclosure is to be made at the onset of any client’s engagement, beginning January1, 2010. It is imperative to note here that although having such an insurance cover just may be desirable, but is not a mandate to follow even after Rule 3-410 is effective. But this rule is widely opposed by the legal fraternity at large. It is believed that once the Rule is made effective, it shall bring to foyer larger difficulties for uninsured attorney’s to generate business. At this time, I would like to quote a study by Louisiana State Bar, Oral Report to the House of Delegates, January 19, 2002 that -œ-¦. only half of American attorneys carried insurance protection (at that time)-¦..-. to read the complete article please refer :-

Related Articles –
Malpractice, Insurance, LPO, Legal process outsourcing,

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