Maryland does not require lawyers to carry professional liability insurance. Oregon, West Virginia, Nebraska, and Rhode Island have forms of mandatory insurance. Many others, such as Delaware and Virginia, require lawyers to disclose their insurance information when renewing a license to practice law. And some states require disclosures to clients depending on the limits of a lawyer’s legal malpractice insurance.
Arguments in favor of mandatory insurance focus on the benefits to clients, including, most notably, the availability of a recovery in the event of a mistake. Arguments against are financial as well, including a concern over affordability for lawyers and the potential for increased numbers of claims.
To me, the benefits far outweigh the drawbacks.
From a practical perspective, lawyers need professional liability insurance. I am not here to sell you on a particular policy, a particular insurance carrier, or a particular producer.
Most firms renew insurance on a yearly basis. When renewing insurance, firms complete a substantial application process. The process is more involved when the firm switches carriers or adds types of insurance, such as cyber liability or excess coverage.
As many already know, the firm works with the insurance professionals to provide detailed information about firm operations to the underwriters. To analyze the risks that a firm poses, the underwriters want to know the nitty-gritty details of how the firm operates, especially in the areas that are most likely to result in claims.
The underwriters focus on these areas because we know from years of claims data the primary sources of claims. According to ALPS Corporation, a major legal malpractice insurer, claims for estate matters, real estate matters, and personal injury matters are among the most common, with increasing numbers.
Also increasing are claims arising out of the use of technology and fraudulent check/wire fraud claims. It is common sense that carriers seek information about the types of matters the firm handles.
Underwriters look at more than just the types of cases. Underwriters want to know about a firm’s process for vetting matters, its operations, and financial procedures when evaluating the firm’s liability risk. Some carriers ask for details about policies designed to prevent large, fraudulent wire transfers. Many ask for details about cybersecurity. Firms must provide this information at the time of application.
While liability risk and ethical compliance are not the same, the overlap is substantial enough that proceeding through the renewal and underwriting process serves as a suitable time to audit current practices.
Because the applications require firms to explain how the firm clears conflicts, state whether the firm requires written engagement letters, explain the firm’s billing systems, detail the firm’s IOLTA process, hiring policies, document management systems, data protection, and more, firm attorneys can review and improve operations. Just looking at the application is informative. Answering the carrier’s questions provides excellent insight into current best practices.
Avoiding ethical problems is multi-faceted. It takes vigilance and diligence. An effective way to keep on the path is periodic reviews of your systems. One excellent time is when you renew your legal malpractice insurance. It gives lawyers an excellent opportunity to take a global view of firm operations with an eye towards improving their internal processes.
Craig Brodsky is a partner with Goodell, DeVries, Leech & Dann LLP in Baltimore. For over 25 years, he has represented attorneys in disciplinary cases and legal malpractice cases, and he has served as ethics counsel to numerous clients. His Legal Ethics column appears monthly in The Daily Record. He can be reached at csb@gdldlaw.com.
This article originally appeared in The Daily Record on June 4, 2025.
Goodell DeVries defends various professionals in Maryland, the District of Columbia, and Virginia, including lawyers and law firms. Many of these cases are ethics matters involving Bar Counsel. If you have questions about the above or are a Maryland lawyer facing discipline, please contact us at EthicsHelp@gdldlaw.com.
