Asleep At The Switch: Avoiding A Negligent Referral Claim

New York: E. T. Paull Music Co., 1897.

Mandatory professional indemnity insurance & a mandatory insurer: A global perspective“, an article by Jennifer Ip (LAWPRO unit director and counsel (Litigation)) and Nora Rock, (LAWPRO corporate/policy writer), in the current issue of LAWPRO Magazine, is required reading for Canadian international law practitioners. The authors provide a comprehensive review of the recent malpractice crisis in the UK and a summary of professional errors & omissions insurance coverage in various jurisdictions.

The LAWPRO magazine also includes a Table summarizing Professional Indemnity Insurance Requirements Around The World. [available here (pdf)]

While many common-law jurisdictions (e.g. United Kingdom, Australia, Hong Kong and Singapore) and most continental European civil law jurisdictions have mandatory professional indemnity insurance coverage requirements, some do not.

The most glaring exception is the United States:

Oregon is currently the only state that requires lawyers to carry liability insurance.

Oregon lawyers must purchase their primary insurance through the Oregon bar’s Professional Liability Fund.19 In an article for Law Practice TODAY, the newsletter of the Law Practice Management section of the American Bar Association, law practice management expert, Ed Poll praised the Oregon program for its affordable premiums and universal coverage, noting that the premiums paid by Oregon lawyers “are much less than the nationwide average [voluntary] payment for malpractice insurance,” and that universal coverage in Oregon means that “[t]he playing field between large and small firms is at least manageable. And the public is truly protected.”20 Jeff Crawford of the Oregon bar’s Professional Liability Fund confirmed that the base premium for the current insurance year is $3,500 (for coverage of $300,000 per claim and $300,000 in the aggregate, plus a defence costs allowance of $50,000), a premium amount that, he notes, “if you consider inflation, has remained quite stable over the past several years.”

The upshot is that a “Google search” of a foreign lawyer’s website, law blog or asking for a “Twitter recommendation” is simply not good enough and the shortest path to a “negligent referral” claim. Due diligence requires that you not only evaluate the foreign lawyer’s credentials diligently (including local bar association status, disciplinary records, etc.),  you must also request confirmation from the foreign lawyer whether he or she carries voluntary E&O insurance with sufficient minimum limits.

Forewarned is forearmed.

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