This often asked question only comes from the attorney that might be paying more than his friend. I say might, because occasionally they are both paying the same premium. But there are other cases where the premiums are dramatically different. Because of insurance privacy laws, we cannot share insurance information to anyone about someone else’s insurance application or policy. Nor will we without a signed release or a court order.
Both attorneys may be with the same insurer and we may write both accounts. But friends do not tell everything. Also their law practices at least on paper may very different.
The factors that can impact attorney malpractice insurance costs are:
1. Practice area differences will impact legal malpractice premium rates, sometimes by 2 or 3 times the premium. This is especially true if one firm has high risk areas of practice such as Medical Malpractice or Real Estate and the other attorney does not. Even if they ‘do’ the same thing, if the areas of practice percentages are different the premiums can be very different.
2. The prior acts dates may not be the same. If one attorney one has had coverage for one or 2 years and the other attorney has “full prior acts”, the attorney malpractice insurance costs can differ by over 50%.
3. The limits of liability for the malpractice policies may be different. One attorney’s malpractice policy as claims expenses outside the limits (CEOL) and the other does not.
4. The deductibles may be different or one has 1st dollar defense and an aggregate deductible and the other does not
5. The hours worked for the 2 attorneys can differ.
6. One attorney has great internal controls the other attorney’s procedures are lacking.
7. One attorney sues clients to collect unpaid legal fees; the other attorney has never sued a client.
8. One attorney has had claims the other attorney has never had a claim or disciplinary matter.
9. The attorneys are with different malpractice insurers.
Each factor can have a dramatic impact on premium. When you combine two or more of these factors attorney malpractice premiums can easily be 2 or more times different. As with some cars, they may look the same from a distance, but can be very different when you look up close.