The Impact of Legal Malpractice Insurance
By Legal Malpractice Lawyers at The Kassab Law Firm
Of the thousands of lawyers who practice across the United States, it is estimated that only 60 percent have malpractice insurance. Unlike attorneys in Oregon, lawyers practicing law in Texas are under no obligation to carry malpractice insurance. Similarly, even though many physicians working in hospitals and other professionals throughout Texas are required to show proof of financially responsibility, attorneys are not.
Numerous specialty contractors, including HVAC specialists, fire sprinkler system technicians, plumbers, electricians and well drilling/pump installation specialists, inspectors, and structural pest control workers are all required to be licensed to practice their profession in Texas. In order to receive and maintain this license, all of the foregoing specialty contractors must show proof of financial responsibility, primarily in the form of insurance, upon requesting licensure from the State.
However, when an attorney applies for a license with the state of Texas all the attorney is required to do is pass the bar exam and show that he or she is of “good moral character.” The result is unfortunate: many clients who have suffered damages at the hands of their lawyers have no practical recourse when the lawyer has no malpractice insurance.
Even more disturbing is the fact that an attorney in Texas is not required to disclose whether or not they carry professional liability insurance. Unlike attorneys practicing in South Dakota, Alaska, Ohio, California, New Hampshire, and Virginia, lawyers in Texas are under no obligation to disclose their lack of professional liability insurance to their clients. Even though it may be uncomfortable, the client should ask his or her lawyer at the beginning of the relationship if he or she carries malpractice insurance and the amount of the coverage. Nonetheless, even if a lawyer does have malpractice insurance, his or her policy likely will not cover fraud, theft, or any other intentional act.
If there is insurance coverage when the client files suit, typically two things will happen. First, the insurance company will assign a law firm to defend the client’s former lawyer against the claims. Second, the insurance company will allocate money to pay the client if the accused lawyer and insurer are not successful in their defense. The amount of money set aside is typically the “value” of the client’s case as assessed by the insurer.