Small Firm (2-10 Attorneys) insurance guide
Firm-wide policies that protect every attorney without duplicating cost.
Overview
Small firms occupy a critical middle ground: large enough to need formal risk management but small enough that a single large claim can threaten the entire operation. When two or more attorneys share liability under a partnership or professional corporation, the insurance program must address shared limits, individual deductibles, and coverage for of-counsel or contract attorneys who may not be full equity partners. Carriers underwrite small firms based on the combined experience of all attorneys, the mix of practice areas, revenue per attorney, and claims history across the firm. A firm-level policy is almost always more cost-effective than individual policies because it eliminates coverage gaps between attorneys and provides a single defense coordination point when a claim involves multiple lawyers on the same matter.
Typical Coverage
Small firms typically carry professional liability limits of $500,000/$1,000,000 to $1,000,000/$3,000,000, with per-attorney deductibles ranging from $2,500 to $10,000. A Business Owners Policy with $1,000,000/$2,000,000 general liability limits and $100,000 to $250,000 in property coverage is standard. Cyber liability limits of $500,000 to $1,000,000 reflect the larger data footprint. Employment Practices Liability with $500,000 limits becomes important once the firm has support staff. Workers compensation is mandatory in nearly every state once you have employees beyond the partners themselves.
Common Risks
Partner liability is the defining risk for small firms: each partner is typically jointly and severally liable for malpractice committed by any attorney in the firm, meaning one associate's error can expose every partner's personal assets. Of-counsel and contract attorneys create coverage ambiguity if their status is not clearly defined in the policy. Lateral hires bring prior-acts exposure from their previous firms that must be addressed through retroactive date negotiations. Internal disputes over compensation, case origination credit, and management decisions generate partnership claims that malpractice insurance does not cover -- D&O or partnership dispute coverage may be needed.
Typical Premium Range
$5,000 - $25,000 per year
Our Recommendations
Purchase a single firm-wide professional liability policy rather than individual policies for each attorney. Ensure the policy explicitly covers of-counsel, contract attorneys, and lateral hires with appropriate retroactive dates. Negotiate prior-acts coverage for any lateral hire whose former firm is not providing tail coverage. Implement a formal conflicts-check system and document it -- carriers reward firms with written intake and conflicts procedures. Consider an Employment Practices Liability policy once you have three or more non-attorney employees, as wrongful termination and harassment claims are common in small professional service firms.
Frequently asked questions
Should each attorney have a separate policy or should the firm carry one policy?
A single firm-wide policy is almost always preferable. It eliminates gaps when multiple attorneys work on the same matter, provides coordinated defense, and costs less than the sum of individual policies. Individual policies can create disputes over which policy responds first and may leave the firm entity itself uncovered.
Are of-counsel attorneys covered under the firm's malpractice policy?
It depends on the policy language. Most firm policies can be endorsed to cover of-counsel attorneys, but you must specifically list them or ensure the definition of 'insured' includes of-counsel relationships. If the of-counsel attorney also maintains a separate practice, a coverage coordination agreement is needed to avoid gaps and disputes between carriers.
What happens to coverage when a partner leaves the firm?
The departing partner loses coverage under the firm policy for future acts as of their departure date. They retain coverage for work performed while at the firm, subject to the policy's retroactive date and reporting requirements. The departing attorney should secure their own policy with prior-acts coverage or negotiate an Extended Reporting Period endorsement to avoid a gap.
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