What is Legal Malpractice Insurance? Are Lawyers Required to Have Insurance?

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What is legal malpractice insurance?

Just like people carry insurance on their vehicles in case of an accident, professionals - such as doctors, lawyers, architects, accountants, etc. - carry insurance in case they commit an error during their practice. This is known as "professional liability insurance."

Legal malpractice insurance is a type of professional liability insurance that protects lawyers and law firms from claims of negligence, errors, or omissions in the course of providing legal services. Legal malpractice insurance helps insured lawyers cover legal defense costs, settlements, and judgments if a client sues for damages due to mistakes, missed deadlines, conflicts of interest, or other professional misconduct.

Are lawyers required to have professional liability insurance? Are lawyers required to have legal malpractice insurance?

The requirements for professional liability insurance vary from state to state. Many states and bar associations strongly recommend or mandate disclosure of whether a lawyer carries malpractice coverage. However, several states do not.

The Texas State Bar does not require lawyers to carry legal malpractice insurance and - even further - does not mandate disclosure to clients whether they carry malpractice insurance. However, while legal malpractice insurance is not required in Texas, the State Bar of Texas strongly encourages it. The State Bar of Texas strongly advocates for lawyers to maintain adequate coverage and emphasizes the importance of such coverage give the consequences and ramifications of failing to have such coverage. The American Bar Association and most other bar associations throughout the country do the same and even provide resources, guidance, and information for both lawyers and clients regarding professional liability insurance.

What should clients know about Legal Malpractice Insurance?

Clients should ask lawyers that they're considering hiring whether they have legal malpractice insurance. Here's why -

1. Financial Protection – If a lawyer makes a mistake that harms the client, malpractice insurance ensures there are funds available to cover potential damages.

   
   

2. Accountability & Professionalism – Attorneys with malpractice insurance are often more diligent and risk-aware, knowing they are held to higher standards by their insurers.

   
   

3. State Requirements & Disclosures – Some states require lawyers to carry malpractice insurance or at least disclose to clients if they don’t have it. If your state doesn’t require disclosure, asking directly is a good practice.

Besides directly but politely asking a lawyer whether they carry legal malpractice insurance, clients should also consider asking lawyers about their coverage limits (“What are your policy limits in case of a claim?") and perhaps even request confirmation in writing  and get a copy of the insurance declaration page. If a lawyer hesitates or refuses to discuss their legal malpractice insurance, it could be a warning sign.

What Does Legal Malpractice Insurance Cover? What does Legal Malpractice Insurance Not Cover?

Legal malpractice insurance covers costs to defend against claims - the costs of the lawyer's legal defense and expenses related to litigation - and damages - such as a settlement or a judgment against the lawyer. Some claims that a client may make against a lawyer may be covered by legal malpractice insurance while others are not included.

Claims that are generally covered by legal malpractice insurance include negligence and breaches of fiduciary duty. Claims that are generally not covered by legal malpractice insurance include:

• Criminal Acts & Fraud – Intentional wrongdoing or illegal conduct is not covered.

• Business Disputes and Non-Legal Matters – Issues related to business operations within a law firm (like partnership disputes) typically fall outside coverage.

• Employment Related Matters - Employment related matters, such as harassment, discrimination, or wrongful termination is not covered.

  
  

Conclusion

Even the best attorneys can make mistakes, and malpractice claims—whether valid or frivolous—can be costly. Legal malpractice insurance ensures that lawyers have financial protection against these claims, covering legal defense fees and potential settlements or judgments. Both clients and lawyers should always ensure legal malpractice insurance is in place to protect their interests.