Properly Reporting Areas of Practice on a Lawyers Malpractice Application
Completing a lawyers malpractice insurance application sounds simple until you reach the Areas of Practice (AOP) section. Should you report what your law firm did last year or what you expect to do next year?
Established firms report what happened during the period the application requests.
Why Your Past Practice Matters
When a firm maintains continuous claims-made coverage claims-made and reported lawyers professional liability policies then include prior acts coverage for past work. Claims reported today cover work from legal services performed years ago. That is why insurers care about your firm’s historical practice. Changing practice areas today does not eliminate the malpractice exposures created by last year’s work.
What If Your Firm Changed Practice Areas?
Report your historical percentages accurately, then explain the change.
For example:
“Real estate represented approximately 30% of firm revenue last year. The firm stopped accepting new real estate matters in July and does not expect significant real estate revenue during the upcoming policy period.”
That gives the underwriter a clearer picture of both your firm’s past exposure and future direction.
What About a New Law Firm?
A newly formed firm lacks historical revenue or billable hours.
In that situation, make a good-faith estimate of anticipated areas of practice. Even if your actual business develops differently your initial estimate still reflects what you expected when completing the application.
The Bottom Line
Do not change last year’s numbers simply because your law firm is changing direction. Answer the question the application asks. Report historical work accurately and explain significant changes separately.
Accurate information allows the underwriter to evaluate your firm’s exposure and prevents questions about your application at claim time.
When unsure how to classify a matter or calculate your percentages, talk with your lawyers professional liability insurance agent before submitting the application.
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Lee Norcross, MBA, CPCU
California License # 0D87292
L Squared Insurance Agency, LLC ® DBA in California as L2 L Squared Insurance Agency, License # 0L93416
Managing Director, CEO
Lee@L2Ins.com
616-726-7080
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