When lawyers think about how much legal malpractice insurance they may need, they often focus on: “What is the largest claim I could reasonably face?” Other lawyers only focus on the amount of the premium or how much the insurance will cost. But there is another question that deserves equal attention: “How much will the defense of the claim cost?”

That distinction matters because almost all legal malpractice policies have what are commonly called eroding, depleting, or defense-within-limits provisions. Under this structure, amounts the insurer spends defending a covered claim reduce the amount remaining under the policy limit. For example: if a lawyer has a $100,000 policy limit and $50,000 is spent on the defense of a claim, only $50,000 remains for continued defense costs, settlement, or an adverse judgment.

Defense Costs Can Change the Coverage Equation

A malpractice lawsuit can require substantial work before the case resolves –…