Attorney Malpractice Back to the Future – Planning Is Not The Same as Doing
“I want quotes next year for doing 100% mediation and no other legal work.”
That sounds straightforward. If an attorney plans to stop practicing law and perform only mediation, shouldn’t next year’s insurance quotes reflect a 100% mediation practice?
Not necessarily.
It has already been three months into the new malpractice policy period, and with practices areas not changing the rating factors will not change.
That matters because insurers look at what an attorney did, not simply what the attorney plans to do in the future. A practice change during the policy year impacts future renewals beyond the next renewal as this next renewal practice area percentages history reflects the current year.
Beyond that, insurers normally file rates at around three months prior to implementation. Never guarantee that the insurer continues writing attorney malpractice insurance. Never guarantee that the insured files a claim. Guessing future premiums accurately not possible.
Planning 100% Mediation Is not Doing It
An attorney may genuinely intend to stop practicing law and transition completely to mediation. But saying, “Next year I’m going to do 100% mediation,” does not make the current practice 100% mediation.
Being three months into your policy and continuing other practice areas remains part of your actual practice history.
Your intentions change your future practice renewals down the road.
Intentions cannot change the work already performed.
Your Malpractice Application Looks at Your Actual Practice
Pay close attention to the questions on your attorney malpractice application.
There is a significant difference between these two statements:
“I plan to perform 100% mediation next year.”
and
“I performed 100% mediation and no other legal work during the period requested on the application.”
The first describes a future goal. The second describes an established practice history.
Why Does Your Past Legal Work Still Matter?
Attorney malpractice insurance operates on a claims-made basis. An attorney can receive a malpractice claim arising from legal services performed before the current policy period.
That is why your past practice still matters even if you plan to change in the future.
Moving to mediation does not erase the potential malpractice exposures associated with your previous legal work. Your prior acts coverage provides important protection for that earlier work.
What Happens If You Really Stop Practicing Law?
If an attorney completely stops practicing law and performs only mediation, the insurance situation changes.
An attorney practicing law limited work to mediation could qualify for a free extended reporting period and then purchase coverage for mediation work.
Practicing less law is not necessarily the same as stopping the practice of law.
An attorney performing 95% mediation and 5% legal work is still performing other legal work.
Free Non-Practicing extended reporting period provisions require completing stop legal work. Other terms and conditions may apply.
Do not Sacrifice Prior Acts Coverage for a Lower Premium
Premium should not be your only consideration when transitioning to mediation.
Before canceling or replacing a claims-made attorney malpractice policy, ask:
-
-
- What happens to my prior acts coverage?
- Do I qualify for an extended reporting period?
- Will the ERP protect me from claims involving previous legal work?
- Will occasional other legal work affect my eligibility?
- What coverages do I need for mediation services?
-
A less expensive policy may not be a better deal if it leaves a gap in protection for prior legal work.
The Bottom Line
With three months into your policy period and your work has not changed your next renewal premium is based on this body of work.
Ultimately stopping practicing non-mediation legal law your insurance needs change. Before making that transition, make sure you understand how it affects your prior acts coverage and extended reporting period options.
Change your practice first. Then let your actual practice history support the insurance application.
Get Lawyers Liability Insurance Malpractice Insurance Quote
Contact Me Today
Lee Norcross, MBA, CPCU
California License # 0D87292
L Squared Insurance Agency, LLC ® DBA in California as L2 L Squared Insurance Agency, License # 0L93416
Managing Director, CEO
Lee@L2Ins.com
616-726-7080
