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Reminder - Know Your Reporting Requirements Under Your LPL Policy

Reminder: The Dangers of Practicing Outside Your AOP

Shutterstock_95746741Lawyers are often asked by family members and friends to handle matters that are outside their area of practice, or AOP.

It is often difficult to say no to such requests, but there are some compelling arguments against dabbling in unfamiliar areas of practice, the main ones being the increased risk of an ethical violation, malpractice claim, and substantially higher insurance rates. Some experts estimate that over 50 percent of malpractice losses occur outside an attorney’s primary area of practice

The Area of Practice Factor

One of the main factors that affects the pricing, underwriting, and procurement of lawyers professional liability (LPL) insurance is what is known as AOP factor. While insurance companies are aware that certain legal areas of practice generate more claims than others, most attorneys may not appreciate the dramatic effect that their AOP has on the pricing for the LPL insurance for their firm.

For example, plaintiff personal injury firms consistently report more claims on a per attorney basis than defense firms, and the higher frequency of claims that comes with personal injury law drives higher LPL insurance pricing, and if a personal injury law firm handles more than 50 cases per attorney per year, that can be a red flag in the eyes of many LPL underwriters.

You Don’t Know What You Don’t Know

Many LPL underwriters consider the perfect law firm to be one that focuses on smaller, less complex risks, preferably all within the same AOP. If something does go wrong, the resulting damages may not be as severe and because of specialization, the firm will have developed a history of expertise and systems designed specifically to handle the demands of that particular AOP

Generally, the more complex the matters being handled, the higher the payouts by LPL insurers when something goes wrong. Worse yet, lawyers who routinely take cases out of their typical practice area are treading on an even more slippery slope – after all, you don’t know what you don’t know.


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