For firms that are currently in operations for over a year:
The Lawyers Malpractice application asks for your areas of practice for the past year in 1 of 2 different methods. Normally it is percentage of billable hours for each area or a percentage of revenue. Many attorneys are frustrated by this answer as the firm may have changed their practice areas recently and gone in another direction. So they want the Lawyers Liability Insurance application area of practice grid (AOP) to reflect what they just started doing or what they now plan on doing. Why would the application not allow for the firm having a new “planned” AOP?
A Lawyers Malpractice Insurance Policy is a “claims made” policy. It provides coverage back to the inception date of continuous claims made coverage once a prior acts date is established and maintained. The Lawyers Professional Liability Insurance carrier tries to charge a premium for the risks that are associated with the firm’s past exposures. In this case, the past acts of the firm, likely reflect a different exposure than the Law Firm’s new direction.
For firms that have just formed without a track record:
For the attorney just establishing their firm, the firm will need to answer the Lawyers Malpractice AOP grid in a prospective manner for the 1st year. This is even though the Lawyers Professional Liability Insurance application asks the AOP question in a retrospective way. The Lawyer Malpractice carrier understands that the 1st year of a new Law Firm, what is planned or budgeted may be different then what happens during the year. As long as the Law Firm makes a good faith effort to answer the AOP grid questions, then there should not be an issue. Barring a material change to the Law Firm, mid-way through the 1st year, there is normally not a need to tell the Malpractice carrier that the firm has pick up a client for work in a different AOP then was disclosed on the Lawyers Malpractice application. Any changes in the AOP gird or other parts of the firm’s operation will be disclosed at on the Lawyers Liability Insurance renewal application.
It goes without saying that if the Law Firm’s attorneys change or a claims matter arises during the year this needs to be reported to the carrier as soon as practical.