A lawyer's mistake costs the client money: a missed appeal deadline, a badly drafted contract, a lost original document. If the client proves that the losses were caused by the adviser's fault, the adviser must compensate them. Professional liability insurance shifts that financial burden to an insurance company, within the policy limit and terms.

What the law says

For advocates (members of the Russian bar), Federal Law No. 63-FZ "On Advocacy and the Bar in the Russian Federation" expressly refers to insuring the risk of an advocate's professional property liability. However, a separate federal law on compulsory insurance of this risk has never been adopted, so in practice policies are taken out on a voluntary basis: by the advocate personally, by the bar formation or under programmes arranged by some regional bar chambers.

For lawyers without advocate status — consultants, law firms, outsourced in-house counsel — there is no compulsory insurance. Large clients and tender organisers often require it, though, and for the firm itself a policy is a way not to lose the business over a single large claim.

There is an important legal nuance. Under Article 932 of the Russian Civil Code, insurance of liability for breach of contract is allowed only where the law provides for it. For advocates, Law No. 63-FZ provides that possibility. For lawyers without advocate status, programmes are usually structured as insurance of liability for causing harm (Article 931 of the Civil Code). That is why the wording of the cover should be read before signing: it determines which client claims will be paid.

What the policy covers

The list depends on the specific insurer's rules, but a typical set is:

  • missed procedural deadlines — for filing an appeal, claim or objection;
  • errors in documents: contracts, statements of claim, legal opinions;
  • incorrect advice that caused the client a loss;
  • loss of or damage to documents handed over by the client;
  • unintentional disclosure of the client's confidential information — often with a separate sub-limit;
  • the insured's legal and other costs of defending against a claim, if agreed with the insurer.

The insured event is not the mistake itself but the client's claim for compensation, accepted as justified by the insurer or established by a court.

What is usually not covered

  • intentional acts and knowingly unlawful advice;
  • fines, penalties and other sanctions imposed on the lawyer;
  • non-pecuniary (moral) damage — unless the policy expressly provides otherwise;
  • claims the insured knew about before the policy was taken out;
  • work outside the declared practice areas or without the required status;
  • losing a case as such. The policy does not insure the result: a lawyer is responsible for the quality of the work, not for the court's decision.

Key policy parameters

Sum insured and limits

The policy sets an aggregate limit for the whole term and, as a rule, a limit per claim. A good benchmark is the size of the largest transactions and disputes the lawyer or firm handles: if you advise on deals worth hundreds of millions of rubles, a policy with a small limit will not protect you.

Deductible

The part of the loss the insured pays themselves. The higher it is, the cheaper the policy, but small claims will have to be settled from your own funds.

Retroactive period

A mistake may come to light a year or two after the service was provided. A retroactive period covers claims for work performed before the policy started, provided the insured was unaware of the problem.

Extended reporting period

The period after the policy expires during which a client can still bring a claim for a mistake made while the policy was in force. It is especially important when changing insurers or closing a practice.

What drives the price

  • practice area: corporate transactions, bankruptcy, tax disputes and real estate deals are considered higher risk;
  • annual revenue and number of clients;
  • experience, qualifications and internal quality-control procedures;
  • claims history over recent years;
  • the chosen sum insured, deductible and retroactive period.

For group programmes — for example, covering a whole law office — the rate is usually lower than when each lawyer is insured individually.

How to arrange cover

  1. Gather information about the practice: specialisation, revenue, headcount, major matters, claims history.
  2. Decide on the limit and deductible and whether you need a retroactive period.
  3. Compare terms from several insurers — especially the exclusions and the claims settlement procedure.
  4. Complete the proposal form and sign the contract.

More about the product in the professional liability insurance section. Heads of law firms may also find directors' and officers' liability insurance (D&O) useful. Polis Re specialists will help you collect offers from insurance companies — submit a request.

Compulsory insurance in related professions

Unlike advocates, several professions in Russia are required by law to insure their liability: notaries (Fundamentals of Russian Legislation on Notaries), insolvency practitioners (Federal Law No. 127-FZ "On Insolvency (Bankruptcy)") and valuers (Federal Law No. 135-FZ "On Valuation Activities in the Russian Federation"). Lawyers working alongside these specialists should bear in mind that a partner's insurance does not cover their own mistakes.