Maybe you’re leaving a corporate in-house gig or putting the pursuit of a law firm partnership aside. Maybe you’re just out of law school. Whatever the reasons, there is a lot to consider when launching your own solo practice. One key issue you cannot afford to overlook is professional liability insurance.

Many solos tend to put liability insurance on a back-burner, either because of cost concerns or a misunderstanding of the substantial exposures you face without it. In fact, many legal entrepreneurs don’t even know where those exposures might exist.

If you are leaving an in-house legal department or a law firm to hang your own shingle there are vital questions to consider as you explore professional liability insurance options, either on your own or with a trusted agent. Some include:

  • Will prior acts with your prior employer/firm be covered after you leave?
  • Does your prior employer owe you a defense under their liability policy after you leave?
  • Can you purchase an individual tail with your former employer to protect you if you are named personally in a future lawsuit?

Another factor for attorneys going solo, especially those who branch out just after passing the bar, is a consideration of part-time or full-time insurance rates. Carriers might offer different rates for those working part-time and those working full-time; however, these rates are vetted carefully. Carriers are not obligated to offer part-time rates even if you are simply doing part-time legal work. Be prepared to pay the full-time rate or, at minimum, be prepared with ample documentation to prove your part-time case, including hourly billing limits and a narrowly defined scope of engagement with your client.

Every attorney going out on his or her own wants to know, “How much liability insurance is enough?” The answer differs for each person. Having a good relationship with a trusted agent or broker helps ensure your practice is fully understood so that you are fully insured. One of the most important considerations is this: attorney fees and court costs are paid from most policy liability limits, depleting the policy over time. Therefore, securing a less-expensive, low-limit policy might seem like a good idea at first. However, it’s almost always a mistake, especially if you are practicing in some of the higher risk practice areas such as trusts and estates, personal injury, and alike. 

Going solo can be tremendously rewarding, but it comes with all the inherent problems of running your own business: managing accounts payable and receivable, human resource issues, payroll, customer data protection, outsourcing, marketing, and more. Professional liability insurance shouldn’t be a problem to manage. Done correctly, it should provide peace of mind.