What is subrogation in legal malpractice insurance?

Subrogation is a standard insurance concept where, after your carrier pays a claim on your behalf, it steps into your shoes and acquires the right to recover that payment from any third party who contributed to or caused the loss. In legal malpractice insurance, subrogation most commonly arises when another party shares blame for the client's damages.

For example, if your firm is found liable for a malpractice claim but the error was partly caused by incorrect information provided by co-counsel, an expert witness, a title company, or a court reporter, your carrier may pursue subrogation against those parties to recover some or all of the payment made on your behalf. Successful subrogation recoveries benefit both you and the carrier, as they may result in reimbursement of your deductible and reduce the net loss on your claims history.

Malpractice policies typically contain a subrogation clause that requires you to cooperate with the carrier's recovery efforts and prohibits you from doing anything that would impair the carrier's subrogation rights. This means you should not sign releases, settlements, or waivers with potentially liable third parties without your carrier's knowledge and consent, as doing so could waive the carrier's subrogation rights and potentially void your coverage.

In practice, subrogation in legal malpractice is less common than in other insurance lines because most claims are settled on a global basis that accounts for all parties' contributions. However, understanding subrogation helps you appreciate why your carrier may want to investigate the involvement of other parties in the events leading to a claim and why cooperation during the claims process is essential.