Myth #1:  Since most NC lawyers buy their malpractice insurance from the same company, that company must have the best price. The truth is that many North Carolina lawyers are paying substantially higher premiums than competitors’ rates for a policy that provides substantially less coverage.  Yes, that’s right – they are paying more to get less.  Those lawyers that have poor claims experience, practice in high risk fields such as intellectual property, syndic...

Defense attorneys who successfully defended a private school against sex discrimination claims are now defending themselves against a malpractice claim filed by their former client.  The Christ Academy claims its attorneys were “negligent and deceptive in defending the school against gender discrimination and retaliation charges” brought by two former employees. This legal malpractice suit began to germinate three years ago when Christ Academy fired two female...

Last week we discussed the case of Christ Academy v. Hermes Sargent Bates and learned the many risks of having an underinsured client. (You can read the post here if you missed it.) Many employers think they are not at risk of a discrimination lawsuit because their employees “would never do that.” This case illustrates, that no employer, no matter how moral, just or innocent, is exempt from the damages and havoc that accompany such a suit.  Yet, many employers choose to forego ...

Most defense attorneys enjoy relatively lower premiums for malpractice insurance.  That’s because they are not as often the targets of lawsuits as their colleagues who represent plaintiffs. Lawsuits against plaintiffs’ attorneys are usually the result of a missed statute of limitations.  However, as the case of Christ Academy v. Hermes Sargent Bates demonstrates, even defense attorneys who win their cases are sometimes sued for malpractice.  To avoid being underins...

Law firms need to reapply for legal malpractice insurance every year. And on every application, whether it be for new business or a renewal policy, the law firm must answer questions about its client billings.  Typical questions are: •How many times have you sued a client for fees in the past 5 years? •What percentage of your billings are over 90 days past due? •What practices have you implemented to avoid suing your clients for fees? Insurance companies ask questions abo...

One of the most difficult concepts for purchasers of professional liability insurance to grasp is the meaning of “prior acts coverage” and “claims-made policies." As the case of Christ Academy v. Hermes Sargant Bates illustrates, a professional negligence claim against a lawyer or any other type of professional, typically evolves from services that were provided several years in the past. At the time the lawyer provides the legal services, it is usually not foreseeable that...

One of the most difficult concepts for purchasers of professional liability insurance to grasp is the meaning of “prior acts coverage” and “claims-made policies." As the case of Christ Academy v. Hermes Sargant Bates illustrates, a professional negligence claim against a lawyer or any other type of professional, typically evolves from services that were provided several years in the past. At the time the lawyer provides the legal services, it is usually not foreseeable that...

The lawsuit by Christ Academy against Hermes Sargent Bates was only recently filed.   Assuming the firm has adequate insurance limits, and there are no coverage disputes with the carrier, the insurance company will likely move quickly to control defense expenses and damages.  Fee disputes and breach of contract claims are typically not covered by a malpractice insurance policy. To trigger the firm’s malpractice coverage, the plaintiff’s attorney had to allege professional n...

What should you do when your malpractice insurer won’t renew your policy? I think it’s safe to say that most highly educated professionals, such as lawyers, doctors, accountants, and engineers, have “Type A” personalities.  Most of us are hard-working, driven, perfectionists, who strive to do the best we can for our clients. Yet, we know that “to err is human”, so we prudently purchase our professional liability insurance and pray we never need to report...

Exploring Your Options for Lawyers Malpractice Insurance? Make sure you compare the coverage – and not just the price. When shopping for Lawyers Professional Liability insurance, or any other type of Errors & Omissions coverage, premium is an important consideration.  However, in today’s competitive market, the differences between premiums are likely to be less significant than the differences in coverage.  Price alone should not be the determining factor when choo...

NY State Bar Says Law Firms May Not List Specialties on their Linkedin Profile First, I’d like to thank each and every one of my LinkedIn connections who have generously endorsed my "skills and expertise" in the areas of professional liability insurance and risk management.  Now, I have to go to my LinkedIn and “hide” them from view!  The New York State Bar and the South Carolina Bar have both issued opinions stating that Rule 1.7, (governing lawyers’ communi...

Most professional liability insurance policies have a Retro Active date or Prior Acts date, few have Full Prior Acts or FPA. Full Prior acts is a type of claims-made liability policy that does not contain a retroactive date and therefore covers claims arising from acts that took place at any time prior — regardless of how far in the past. For example, assume that an insured has a claims-made policy that includes a January 1, 2000, retroactive date and a January 1, 2014–15, term....

Average loss caused by employee dishonesty is $140,000 with one in 5 cases over $1 million. Background checks are of little help, most frauds are committed by 1st time offenders Firms now rely on internet many to increase the speed and ease of doing business law firms have been exposed to funds transfer fraud and conversion by 3rd parties Your business owner’s policy may have some crime coverage in ...

All policies have provisions for timely notification.  Some state as soon as practical, others state a specific time period.    All require notification of events prior to policy expiration or renewal.  Best source is to read your policy as to timing requirements.  By not doing so may cause you a coverage problem or denial of a claim..  This is not an all-inclusive list, but these events need to be reported to your agent and/or insurance carrier: Chang...

How Does a Data Breach or Cyber Attack happen? Many data breaches are not very high tech:  1.    With the use of tablets, laptops, smart phones, and thumb/flash drives by much organization, simply losing or having these devices stolen can open up your entire treasure trove of protected data.  Also being careless about where devices are used, by as simple as someone watching what you are doing to, transmitting highly protected data over an unsecure wireless network can...

What can be done about Data Breach or a Cyber Attach? Prevention is always the best medicine: 1.    Training employees on the proper methods for handling the devices, passwords and how to use the internet and cloud. 2.    Keeping current with operating systems and application software updates 3.    Having up-to-date antivirus and data breach software installed system wide. 4.    Practicing good computer habits, ie changing password...

Lawyers Professional Liability Insurance (LPL) and Accountants Professional Liability (APL) Insurance claims made coverage ends at the policy/coverage termination.  Lawyers Professional Liability Insurance Policies (LPL&APL) are generally written for the firm and coverage extents from the firm to the employees and partners/members.  Changes in firm makeup may constitute a material change to the firm and could trigger coverage termination (caused by changes in partners/members,...

All Lawyers Professional Liability Insurance policies have exclusions to some extent for acting as a Director or Officer of an organization.  Attorneys need to be careful when being asked to sit on a board or act as an Officer of an organization to not jeopardize coverage.  Some policies just restrict coverage when you are acting in the capacity of an Officer or Director, but will provide coverage for other activities that you do for the client.  Other policies have an outright ba...

Question from Attorney:  I am a full time employee at a large company.  I do an occasional will or trust on the side.  Probably less than 5,000 a year in revenue.  Is there a minimal coverage for that?  Should I get coverage for when i did have a practice?  I sold it in December 2014.   Response: We can get you a  lawyers professional liability insurance quote for the work you do on the side, at a relatively minimal cost, which should be less than $1,...

Thank you, Tracy.  We use retainer agreements.  Please define a non-engagement and disengagement letter and let me know how they are used.  Thank you.   I’ve pulled this information from http://www.nysba.org/ManagingYourPractice/ This is what the professional liability insurance carrier underwriter is expecting: Non-engagement letters explicitly inform prospective clients that the law firm will not accept retention. These should be used when your firm decides no...

Law firms designate the completion on the Lawyers Professional Liability application to many different people.  This varies from the Managing Partner to the beginning associate or newest clerk in the office.  While this can be expedient to have the newest member of the staff complete the application it can open up the firm to uncovered exposures, claims and at worst resciession of coverage. Either above or below the signature line of most applications have a phrase like the following:...

It is not possible to write a new policy to cover a suspended attorney with a Lawyers Professional Liability Insurance policy.   Most policies have an outright exclusion for a suspended attorney.  Although some Lawyer Professional Liability Insurance Carriers will permit the coverage to continue until renewal, many will cancel as soon as notified of the attorney’s suspension. Typical coverage exclusion for a suspended attorney is: “Professional Legal Services rendere...

Awarded attorney’s fees normally are not covered under a Lawyers Professional Liability Insurance policy.  Included under this category of damages are also civil or criminal fines, sanctions, or penalties ordered by a court or other administrative body.  Depending on the insurance carrier’s Lawyers Professional Liability Policy, the language for this exclusion normally is found in 1 of 3 places; the insuring agreement, the definition section where damages or claims are defi...

Disciplinary Coverage is an additional coverage found on most admitted and some non-admitted Lawyers Professional Liability Insurance policies.  Some Lawyers Professional Liability Insurance carrier’s policies that do not offer this coverage are willing to endorse this coverage on if requested.  With Lawyers Professional Liability Insurance policies not being standard, this additional coverage can be called “Additional Coverages”, “Supplemental Payments”...

Many Law Firms have a misconception that the Lawyers Professional Liability Insurance Coverage for an attorney continues until the end of the policy term because it is paid for even after the attorney has left the firm.  Once an attorney leaves a law firm their work they do after they leave the firm is not covered.    That attorney will need to purchase a new policy or be added to their new firm’s Lawyers Professional Liability Insurance policy to have on going coverage...

Even though the insurance carrier is no longer writing Lawyers Professional Liability Insurance your coverage for an issued Extended Reporting Period Endorsement (Tail) remains in force.  With this stated, as the years go by you could be with a carrier that has merged, been sold, liquidated or gone completely out of business.  Many times your insurance agent will be able to help you locate the proper staff to report a claim. And if another insurance carrier has “taken” over...

Question from Client: Is this Lawyers Professional Liability Insurance Policy Extended Reporting Period Endorsement (Tail) Full Prior Acts? Response: Many people think that there is a separate policy issued once “Tail” is purchased on a Lawyers Professional Liability Insurance Policy.  This is not the case.   Generally the endorsement is just one page and only one or 2 paragraphs long.  There is not a separate policy that is issued.  The Extended Reporting...

Request from our Client: Need to add a rider to our Lawyers Professional Liability Insurance Policy to increase my limits to cover a large real estate deal for a client. Response: The term “rider” is normally associated with life insurance and health insurance policies.  For property and casualty policies the general term is an "endorsement." As to the request, a Lawyers Professional Liability Policy is a “claims made policy.”  Given this, if a claim is made...

It’s important to encourage your staff to improve client relationships whenever possible. Surprise your staff with gift cards or a catered lunch when you see them go above and beyond for a client, or if they consistently assist you with providing great client relations. Reprinted from AttPro Risk Management Tip of the Month.  www.attorneyprotective.com

If your 2 person law firm is splitting up and each going separate ways, the best approach for the firm is to Purchase an Extended Reporting Period Endorsement (ERP/Tail) at the time the split occurs.  The ERP is made part of your last Lawyers Professional Liability Policy extending the reporting period for the number of years purchased. Note that the firm should cancel the Lawyers Professional Liability Insurance Policy when the firm split occurs.  The firm should not wait until the a...

What professional liability limits should a firm carry is a frequently asked question.  It is one of the hardest questions for an insurance agent/broker to answer for a law firm.  The broker simply does not know your law practice well enough to give more than a ballpark of needed limits.  Although there are general guidelines, there is no set answer for a law firm.  Best answer is given the type of practice a law firm has and the type of clientele,   if I make a mis...

This is a frequently asked question.  Attorney takes the “free” non-practicing Extended Reporting Period Endorsement(ERP/Tail) on his Lawyers Professional Liability Insurance Policy and decides to start practicing law again at a later date.  What is the impact on the ERP?   In most circumstances once the attorney starts to practice law again the “free” retirement ERP becomes null and void.  Given the claims made nature of Lawyers Professional Liabi...

Lawyers Professional Liability Policies are “claims made” policies.  Meaning that the covered act claim must be reported (claim made) during the policy period or during the extension of the reporting period.  Many Lawyers Professional Liability Policies provide for a “free” retirement or non-practicing extension  of the reporting period (ERP) if the attorney has been with the carrier for the required number of years and meets other requirements the policy. ...

A Lawyers Liability Policy is a “claims made” insurance policy.  Once coverage ceases, so does your coverage for your past acts.  This is unlike an “occurrence” policy, such as a Business Owners Policy, where if you let the coverage lapse for a few days and start another policy there is only a gap in coverage for the days that the “occurrence” policy was not in force.  But with the "occurrence" policy you do not loose coverage for the time you h...

Many attorneys are upset when they find out that suing clients for unpaid legal fees can cause their lawyers malpractice insurance premiums to increase.  In fact, with many admitted Lawyers Professional Liability Insurance carriers as few as 5 suits in a 2 year period of suing clients for unpaid legal fees can cause the carrier to either decline to write, non-renew your insurance or place restrictive policy exclusions on your policy. An attorney states, “I want to get paid for ...

The “automatic” Extended Reporting Period (ERP) provision in the Lawyers Liability Policy does not extend coverage or provide a “grace” period for renewing coverage.  If your policy has this provision the only thing it does is extend the reporting period in cases where no other coverage is purchased.  If other coverage has been purchased then this provision does not apply. Even with this ERP in force, if you do not renew your coverage by the policy expiration d...

Question: I am told my Lawyers Professional Liability Insurance Policy has a “Hammer Clause”—what is a “Hammer Clause”? Response: There is no Lawyers Professional Liability policy that actually states or has a defined term for a “Hammer Clause”.  It is an insurance slang term referring to certain insuring agreements designed to force the insured to settle claims.  The clause contained in many Insuring Agreements or Defense & Settlem...

Many of the Lawyers Professional Liability Insurance Mutual Companies are licensed in very few states.  Some Mutual Insurance Companies are only licensed in their domiciled state.  Often times they required the law firm if they are going to accept clients in another state to get a 2nd policy for the other state.  We have actually had a few law firms have 3 policies in 3 different states. This problem is not just limited to the Mutual companies.  Many Stock Lawyers Professi...

Lawyers Professional Liability Insurance companies cap their exposure to losses through a variety of means.  One is by limiting the limits the carrier will post for one firm.  All Lawyers Professional Liability Insurance companies have reinsurance which also limits their exposure to “shock” losses.  Reinsurers in their reinsurance treaties dictate the firm types written under the treaty and the limits they will reinsure.  Again the reinsurers also want to limit th...

Regardless of whether you are moving your Law Office across town or out of state you should notify all of your property & casualty insurance carriers, this includes your Lawyers Professional Liability Insurance/Malpractice Carrier as soon as possible.  Do not wait until renewal to notify your insurance carrier and/or agent. As to your Lawyers Professional Liability Insurance, many insurance carriers will either cancel your coverage midterm or non-renew your Lawyer Professional Liabilit...

Lawyers Professional Liability Insurance policies are written on a “Claims Made” or “Claims Made and Reported Form” policy form.  This is unlike an “occurrence” policy in many ways.  One of the biggest differences is that with a “Claims Made” form the law firm will settle on the limits that are in-force at the time a claim is made not when the act occurs.  With an “Occurrence” form the claim is settled on the form that is...

Often law firms finance their professional liability insurance through a premium finance company.  It is a good way to manage cash flow.  Some law firms whether because of cash flow issues or poor procedures let their Lawyers Professional Liability Insurance go into cancelled status with the finance company for premium nonpayment.  The premium finance company as part of the agreement to finance a Lawyers Professional Liability Insurance is given a power of attorney to cancel the c...

Insured asks what is “Step Rating”?  Did not find term defined or mentioned in my policy. Response: Lawyers Professional Liability Insurance policies are written “claims made” policy form.   Most Claims Made Policies are Step Rated.  At policy inception of  a law firms 1st "claims made"  Lawyers Professional Liability Insurance policy there are no past acts to cover.  During the first few years of “claims made” coverage the...

While Lawyers Professional Liability policies do not have standard wording excluding attorney’s fees it is a common exclusion.  Normally attorney’s fees are carved out in the definition of damages. When examining the Lawyers Professional Liability Policy, this exclusion is not normally found in the exclusion section of the policy.   Frequently you will find this in the definition of “damages” or what is a “claim expense”.  The Medmarc Lawy...

Lawyers Professional Liability policies use no standard form.  Even though most policies are worded different, they generally cover the same risks and exposures.  But as the saying goes the devil is in the details.  Case in point is the definition of “an insured”.   Most polices cover current attorneys, employees and partners along with past attorneys employees and partners under the firm’s policy.  There are normally reporting requirements spelled...

A frequently asked question from solo attorneys is why they need a backup attorney in order to obtain their Lawyers Professional Liability Insurance Coverage.  The rationale for a solo having a backup attorney is to make sure that if due to unexpected circumstances the insured attorney cannot appear in for a court date or meet a client that (s)he as another attorney that can temporarily fill in to keep the practice going.   In larger firms, the assumption is that the law firm has ...

Question from Law Firm: Law Firm’s Managing Partner states, “My Travelers Lawyers Professional Liability Insurance Agent tells me that it is going to cost 3 times expiring to buy an Extended Reporting Period Endorsement (ERP or Tail).  Our law firm is merging with another firm and is required to have an ERP.  I am shopping for a better price.” Response: Right, wrong or indifferent, the best option for purchasing a Lawyers Professional Liability Insurance ERP is thr...

When completing the Lawyers Professional Liability Insurance application a frequent question is how to fill out the area of practice grid (AOP).  I suspect that it is frequently done incorrectly. 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;either a percentage of billable hours for each area or a percentage of firm revenue.  Many attorneys are frustrated by...

Question from Attorney: Will you write a Lawyers Malpractice Insurance policy for me without prior acts coverage?  I currently have prior acts coverage and want to renew without any prior acts coverage and do not want to purchase a Tail or Extended Reporting Period Endorsement. Response: Attorney Malpractice Insurance or Lawyers Professional Liability Insurance is written on claims made basis.  Voluntarily renewing without prior acts coverage means that you have given up the protect...

Question from Law Firm: My Lawyers Professional Liability Insurance carrier non-renewed my policy because of a claim.  Now all I can get is “Surplus Lines” or a non-admitted insurance carrier for a much higher premium than I used to have to pay.  How many years after a legal Malpractice claim do I have to wait to get back with an “admitted” Lawyers Professional Liability Insurance carrier? Response: There is no one answer to this question.  One of the be...

Avoid fee disputes by explaining the fee arrangement in great detail during the first meeting. Confirm this understanding in writing and have the client agree by signing the agreement. When billing the client, ensure there is enough detail in the bill to allow the client to understand everything you are doing on their behalf. Use simple terminology and avoid abbreviations to make sure the bill is easily understood.   This re-post courtesy of Attorney Protective.  For other helpful...

The purpose of a Risk Purchasing Group (RPG) is to allow like risks to be able to purchase liability insurance on a group basis.  In 1981 Congress enacted the Products Liability Risk Retention Act that allowed the formation of groups to be formed to purchase liability insurance on a group basis.  This federal law superseded many state insurance laws that prohibited the formation of specialized exclusive groups to purchase insurance.  The law only applies to casualty or liability...

It is not a good idea to pick up an attorney’s past acts exposure for Lawyers Malpractice Insurance for a number of reasons: 1.       It immediately will increase the firm’s Lawyers Professional Liability Insurance premium.  Many Malpractice insurance carriers will add an attorney without prior acts at no cost midterm, if it is a multiple person law firm. Any change in premium will come at the next renewal.  With adding the attorney with prior...

Many Law Firms are reluctant to report claims made against them.  Many times the Law Firm feels that the Lawyer Liability Claim is small and they can cover it themselves and it will help their insurance history, thereby keeping their Lawyers Malpractice Insurance premiums low. This strategy of keeping your premiums low sometimes is a good idea with property insurance.  But not reporting a Lawyers Malpractice claim will put you in violation of the policy conditions.  The following...

Law firms that work with Health Insurance issues and clients should be very concerned about protecting the confidential information as prescribed by HIPPA and their legal clients.  If a Data Breach should happen with confidential Health Insurance Information compromised, in addition to 3rd party damages, you may well have 1st party responsibilities under HIPAA.  Your Lawyers Malpractice Insurance policy may cover the 3rd party damages, but likely will not cover any 1st party obligation...

Many states have statutes that limit the time to file an action against a lawyer.  The statutes many times have statements in them when a person would responsibly know an error was made.  Or for example, in Michigan, plaintiffs have 6 years after the date the alleged malpractice was committed to bring suit regardless of when it was discovered.  So depending on the state the lawyer is practicing and the circumstances the statute of limitations varies widely. In some states, if the...

Much has been made about the April 12 US Court of Appeals decision in Travelers vs Portal Healthcare Solutions where the court found that the Travelers Commercial General Liability policy (CGL) did not exclude coverage for data breach.   Portal Healthcare had argued that it was required a defense by Travelers over the data breach suit of New York Hospital patients where the firm was hired to protect Hospital’s data. The ruling only covered defense costs and was very specific to ...

Every year, year after year you are required to fill out a new application.  It is enough to make you scream.  Accountants and Attorney Malpractice Insurance carriers generally want an updated application every year.  Business Owners, Workers Compensation and Commercial Auto insurance carriers generally renew each year without an application.  Why the difference between my Malpractice and general business insurance carriers? The exposures for Business Owners, Workers Compens...

Insurance carrier loss runs are a report that shows what claims have been reported to the insurance company.  This is a report that is prepared by the claims department but can also be generated by many underwriters.   The loss run reports can show the claims, date claim made, when matter originated, amount reserved for claim (indemnity & expenses), amount paid for claim (indemnity & expenses),  and whether open or closed. It is standard operating procedure for gener...

Question from Attorney: I am still looking at alternatives for renewing my attorney malpractice coverage and cannot get firm terms until I get Insurance Carrier Loss runs from my incumbent carrier.  If I am a “few” days late renewing coverage is that going to be a problem?  There is a “grace” period anyway, right? Response: Letting your Lawyers Professional Liability Insurance Lapse can have consequences.  There is no grace period.  Some of the majo...

One area that law firms get caught on is completing the claims section of either the incumbent malpractice insurance carrier’s renewal application or a new business application with a different carrier at renewal.  “Prior Knowledge” of a claim is one of the leading causes for denial of Lawyers Professional Liability Insurance Claims. Failing to report potential claims can cost the firm: 1.       Failure disclosing a potential claim on the ap...

Another Law Firm that needed was being non renewed by their current Lawyers Professional Liability Insurance Carrier because of claims, severity, and frequency.  This combination meant that it was prohibitively expensive to find a Malpractice Insurance policy that covered their prior acts.  This 13 member firm was looking at premiums with prior acts of over $350,000 for a $1 million of coverage.  Without prior acts the premiums were around $125,000.  The extended reporting pe...

One of the most asked questions is what is an “Innocent Insured Clause”.    The purpose of an Innocent Insured Clause is to provide coverage for individuals that are members of the firm for deliberate acts that normally would be excluded from coverage as long as those individuals had no knowledge and/or did not participate in the acts of the individual in the firm that committed those acts.  The Wesco Insurance policies Innocent Insured clause is as follows: &ldq...

1st dollar defense (FDD) is sometimes called a Loss Only Deducible. What ever the name the meaning is the same.  Certain professional liability insurers for attorneys and accountants offer this coverage.   With FDD the insured is only responsible for the deductible if there is an indemnity payment required on the claim.  Without FDD the deductible is due as claims expenses or indemnity payments are incurred.   If the claim that is made results in no indemnity paymen...

Many people are concerned after they report a potential claim or incident the malpractice insurance company’s claims department sends them a Reservation of Rights Letter.  This is a standard procedure for most malpractice claims departments.  The letters purpose is to acknowledge the report of the claim and lay out the pertinent terms and conditions in the professional liability insurance policy.  As the name implies, while acknowledging the claims notification, it does not ...

Attorney Asks: Why did the attorney malpractice premium not go down at renewal?  I decided to switch to all criminal work which I know is a lower risk area of practice, but the renewal application only wants to know what was done in the past year.  I told carrier that I want the practice areas changed to criminal anyway.  I want a lower rate this year. Response: The Lawyers Professional Liability Insurance renewal application is meant to capture what was done on retrospective b...

Many people think that there is a separate policy issued once “Tail” is purchased on a Lawyers Professional Liability Insurance Policy.  This is not the case.   Generally the endorsement is just one sheet of paper and only one or 2 paragraphs long.  There is not a separate policy that is issued.  The Extended Reporting Period Endorsement (ERP/Tail) is attached to the last in force policy at the time coverage was terminated.  Other than amending the repor...

Question from Attorney: Why do I need prior acts coverage for Attorney Malpractice Insurance?   Response: Lawyers Professional Liability Insurance is written on a “Claims made” policy form.  “Claim made” coverage in its purest form would only provide coverage for covered acts that that occurred and were reported during the policy period.  Generally the policy period for Attorney Malpractice is written on an annual basis. Many Attorney Malpractice erro...

There are many different deductible options; some are packaged into the policies some are provided as an additional charge. 1.       Zero Dollar Deductible—this is listed 1st, as with a zero dollar deductible the options list after this do not apply.  With a Lawyers Professional Liability Insurance true zero dollar deductible option, once a claim is presented, the firm has no out of pocket costs for the deductible, whether for claims expenses or indemnit...

Attorney Malpractice Insurance Carriers that are not licensed to write in all states will decline to write coverage for Law Firms that have clients in states that the insurance carrier is not licensed.  With some carriers, even one client in the wrong state will be cause for a declination to issue a policy. The reasons for this are: 1.       Attorney Malpractice carrier generally do not have panel counsel in that states not licensed 2.    ...

Attorney Question: “Why do you need the declarations page & policy endorsements to provide a malpractice quote?” Response: Attorney insurance malpractice is claims made coverage.  There are no standard policies for lawyers professional liability insurance.  Every malpractice carrier has different policies declarations pages and endorsements.  The malpractice declarations page provides basic information such as effective and expiration dates, limits, deductible...

Attorney Malpractice Insurance and Accountant Malpractice Insurance are written on a claims-made basis.  One of the issues is when should a claim be reported and to which insurance carrier on a claims-made policy.  The liability portion of your Business Owners and Workers Compensation policies are written on an occurrence policy form.  Again the question arises as to when to report a claim and to whom.   The 1st time purchaser of a claims made professional liability in...

While it is one of the more boring things to do, properly completing the Lawyers Professional Liability Insurance application is very important.  While this process takes away from billable hours, if done incorrectly it can lead to having claims denied, the law firm being non-renewed, or if the error is material enough coverage rescinded. It is perfectly permissible to have an “assistant” complete the application, but the partner that is signing the application needs to thoroug...

An important and sometimes overlooked item is what are the entities that are actually insured under the Lawyer Professional Liability Insurance Policy?  Generally Attorney Malpractice Insurance policies are written on behalf of the named insured firm and all of the attorneys that work for the firm are insured for the work that they do for the firm.  This simple concept if violated can cause problems at claim time. If a firm has an attorney malpractice policy, it is important for the...

Brief background Most property & casualty insurance policies are occurrence policies.  With an occurrence policy, the policy that is on the risk at the time that a covered act “occurs” is the policy that the claim will be settled under, regardless of when the act is reported (barring policy provisions and/or statute of limitations issues).   For most property losses ie such as an auto accident, it is very easy to determine the occurrence date.  Same goes for ...

Claims made insurance policies are designed to provide coverage for covered acts that a claim is made and reported during the policy period.  An unendorsed claims made policy generally only provides coverage for the current policy term for covered acts that occurred during the policy period and where the claim is made and reported during that term.  An unendorsed claims made policy provides no further coverage once the coverage has lapsed.   This can be a big problem if the c...

Occasionally we have an attorney call because they are in need of past acts coverage for a variety of reasons.  Sometimes they are about to become a Judge or Prosecutor etc. and never had insurance, but are now required to have past acts coverage before assuming their new duties.  Another reason is that they worked for a large firm and have left and are now responsible to a very large deductible, i.e. over 100k if there is a claim made against them for while they worked for the firm.&n...

As the law firms try to address their costs by avoiding hiring new associate attorneys many firms have turned to hiring contract attorneys either on a short or long term basis.  This has advantages to the law firm by being able to take on more legal work without having to permanently increase its fixed costs.  Right, wrong or indifferent, many contract attorneys work for much less than associates attorneys in the firm when you add the costs of benefits, payroll taxes and workers compen...

Most lawyers professional liability insurance carriers require a backup attorney or they will not issue a policy for a solo practitioner.   Frequently the solo attorney will ask why this is a requirement.  The solo attorney protests that that they do not need a backup attorney as they do not have court appearances to be covered or filing deadlines.  If the attorney is ill or out for a few days it is not big deal.  So why won’t the malpractice insurance carrier ju...

See the Rest of the Story.  When Attorney Malpractice Prior Knowledge is not Prior Knowledge Blog It is important to know when to put your Attorney Malpractice Insurance Carrier on notice.  Most malpractice policies require the insured to put the malpractice insurance carrier on notice when the insured has ‘reasonable knowledge or can reasonably expect’ that a malpractice claim may be filed against the insured.  Malpractice policies also have language in them specific...

This question comes up with some frequency from Prospective Insureds getting close to retirement:   Question:   “I received your inquiry letter dated June 14, 2017. I currently insure with MLM However, I am considering retirement within the next two years and I am wondering what insurance is offered for lawyers in retirement.   MLM has handled all my past claims and any recent possible legal malpractice claim has been reported to MLM for notification.”   R...

New York’s ethics board’s opinion follows New Jersey, Ohio, South Carolina and Pennsylvania in stating that Avvo and LegalZoom along with other such online legal service providers violate New York’s rules of professional conduct.  The New York ethics board states that the ‘marketing fee’ is actually a ‘referral fee’ in violation of Rule 7.2(a) of the New York Rules of Professional Conduct. Rule 7.2(a) also prohibits the reasonable impress...

In Westport Insurance v Peter G Mylonas, Westport filed a declaratory action with the court to determine whether multiple allegations of attorney malpractice during Mylonas representation of his client Papadopoulos result in one claim or many claims. During a jury trial, which Westport provided a defense of Mylonas, a jury awarded Papadopoulos $525,000 for attorney malpractice.  Mylonas had been retained by Papadopoulos to form a corporation.  During the trail Papadopoulos presented a...

Georgia Attorney Sandra Finch represented her client in a fire damage claim against Allstate Insurance.  Attorney Finch was accused of obtaining without permission photographs of a Steamatic guide that was stored in Mark Gould’s office while Attorney Finch was waiting to depose Gould.  During the deposition Attorney Finch showed Gould a number of photograph’s of the Steamatic Guide.  In addition, Attorney Finch also showed Gould a photograph of the inside of Gould&rsqu...

Debt collection law firms have one of the highest frequencies of reported malpractice claims/incidents for all types of law firms.  While most claims are relatively small, the frequency of claims drives up attorney malpractice rates for all law firms doing debt collection.  There is always the fear by insurance carriers that just one Fair Debt Collection procedure violation can turn into a large class action against a debt collection firm.  The frequency and severity of debt colle...

An attorney at Wilmer Hale accidentally sent confidential information about the departure of  Pesicos former general counsel to the Wall Street Journal.  Up to that time almost no one knew about the SEC inquiry.  According to the information released, former Pesico general counsel Maura Smith had initiated an internal investigation into financial misreporting and the SEC is now looking into her departure as a violation of the Whistleblower laws.   To read the rest of the st...

Questions dealing with Extended Reporting Period Endorsements (ERP or Tail) are the most frequent questions that we get.  Many attorneys are shocked at the cost of an ERP.  ERP premiums regardless of your attorney malpractice insurance carrier are a multiple of the expiring premium.  The only exception to this is a ‘non practicing ERP’ or ‘retirement tail’ that an attorney can get if he is with a carrier that offers this option at retirement and you have be...

Many an insured has received an unpleasant surprise finding out after a court has awarded attorney’s fees or punitive damages that these awards are not covered by their malpractice insurance policy.  Yes the act(s) that were alleged were covered and yes your insurance carrier paid your defense costs and the award for damages.  But the largest portion of the award may be the punitive damages and attorney’s fees. The time to check for coverage is not after the punitive damag...

In the case of Maroulis v Friedman, Maroulis retained Attorney Friedman in a divorce proceeding in June of 2010.  In November 2011 Maroulis dismissed attorney Friedman and hired another law firm.  In July 2012, Maroulis settled the divorce action. In October 2014, Maroulis sued Friedman for malpractice and emotional distress.  This case was dismissed by summary judgement and appealed by the plaintiff.  The appellate court up upheld the dismissal. It is important to remember...

According to ABC News a dead man’s unsent text message to his brother was accepted by an Australian court as the dead man’s will.  Although this case has little influence on the US Court System it is a sign of the changes happening all over the world.  The dead mans wife had applied to the Supreme Court to manage her late husbands assets, arguing the text message was not final because it was never sent.  The man’s brother had found the text message on his dead ...

Attorneys that are supposed to read contracts for a living.  They tell their clients the importance to not only read the contract but to understand what it means.  Rarely do attorneys follow their own advice; many times they end up with expensive lessons.  Even more surprising is for an attorney to accept verbal assurances that they will have their attorney malpractice prior acts exposures covered in retirement for free.  Never asking for the details or requirements needed to...

Mr. Grasz was nominated to the US Court of Appeals for the 8th Circuit by President Trump.  His nomination hearing before the Senate Judicial Committee was recently held.  The ABA unanimously rated Mr. Grasz Not Qualified.  Of the 42 nominees that President Trump has nominated for judge, 40 of 42 have been rated by the ABA as Qualified or Very Qualified.   Some of the conclusions of the ABA Grasz investigation were: "The ABA interviewed several colleagues of Grasz,...

According the Illinois ARDC in 2016 of the 13,500 solo attorneys practicing law 41% of them did not carry attorney malpractice Insurance.  Except for a handful of states attorney malpractice insurance is not required.   So as shocking as the ARDC Illinois number is to the general public, this is not a surprising number.  It is estimated that nationwide in states that do not require the attorneys to carry attorney malpractice insurance over 1/3 of those law firms go bare. So ...

Many law firms hold attorneys that leave the firm responsible for the attorney malpractice claims deductible should a claim be made against the firm for work that the attorney did while at that law firm.  In most cases smaller law firms carry deductibles of $10,000 or less so although this could hurt the departing attorney’s pocket book it would not be catastrophic financially.  Many larger law firms carry deductibles that can be north of $100,000.  Don’t know about yo...

For those of you looking for another legal specialty, why not space law.  Just think you could be working for Elon Musk or Richard Branson to name a few in a galaxy far far away.  So when the Russian satellite collides with Chinese space junk, you may be able to represent one of the parties in space court in the final frontier.  Or if France decides to annex part of the moon, you could help litigate the dispute to the highest court. In all seriousness, as activity increases in ...

A law firm decided to notify everyone that it was moving by e-mail.  Normally this is an everyday occurrence, unless the sender decides to create a distribution list with a few hundred of its closes friends putting the distribution list in the ‘cc’ e-mail address line and not the ‘bbc’ e-mail address line.  Other than the fact that the law firm may be disclosing client information, an ethics violation, it is certainly not a way to make or keep friends. Once a f...

Normally when someone sues naming every business or government agency with a relationship to a property owner the case gets kicked as a nuisance case.  But the rules change when the landowner being sued is a Colorado marijuana grower by the adjacent land owner in Federal Court under the RICO Act (Racketeer Influenced and Corrupt Organizations Act.)   Wait a minute; isn’t the RICO Act supposed to help fight organized crime?  When you look at the facts about marijuana...

A recent decision by the Tax Court Avrahami  v IRS and Feedback Insurance Co V IRS highlighted that the IRS is now looking more closely at captive insurance companies being used for tax avoidance.  The Avrahamis own 3 jewelry stores and 3 shopping malls in the Phoenix area.  Their CPA McEntee recommended that they set up a captive insurance company to reduce their taxes.  Based on that recommendation the Avrahami’s retained Attorney Hiller for estate planning services...

AttPro Ally - Time to be thankful In this issue: Better Safe than Sorry: Emergency Preparedness for Lawyers ’Tis the Season...for Ethical Breaches? AttPro Snippets Read the full issue

PA Money Grab

The ABA Journal recently reported in Holtzman vs Turza, that Illinois CPA Ira Holtzman brought a class action suit against Illinois attorney Gregory P Turza for violating the Federal Telephone Consumer Protection Act (FTCPA) almost a decade ago.  8,430 unsolicited faxes were sent to accountants without an ‘opt-out’ provision.  The US District Court awarded statutory damages of $500 per fax that contained a ‘Superman’ references and were headed with the title &ls...

The attorney was with a high risk insurance carrier letting his coverage lapse in 2016.  He wrongly assumed that it would not be a big deal to get his prior acts back after more than a year and ½..  He had been paying around $7,000 annually to cover his past acts.  L Squared was able to find an insurance carrier that was willing to ‘repair’ his past acts, but now the cost for this was going to be $17,000 annually.  According to what he told the L Squared Ag...

During a closing on a real estate transaction, cyber criminals sent new instructions via e-mail for sending the monies.   Insured did not verify by a phone call or other means that the new instructions changing the account numbers was correct.  $150,000 was sent to the cyber criminals via ACH as a result and the money is gone.  Fortunately for the insured, there was coverage for fraudulent wire transfers up to $150,000 per claim and per policy year.  This happened 3 mo...

Eric Conn, aka Mr. Social Security, was captured while coming out of a restaurant in a Honduras shopping center by a Honduran SWAT team.  He is scheduled to be returned to the US on December 5. Eric Conn was nicknamed Mr. Social Security because he handled over 3100 social security disability cases with a federal judge and doctor on his payroll.  This allowed Conn to fraudulently get approved over $550 million in questionable social security disability benefits.   His form...

Prior acts along with a ‘claims-made’ policy form are two of the most misunderstood concepts with malpractice insurance.  It is a shame, because this misunderstanding costs many professional s millions of dollars in coverage every year.  There are two basic property and casualty insurance forms; the ‘occurrence’ policy form and the ’claims-made’ policy form.  So what is the difference and what does this have to do with prior acts? ‘occu...

An attorney malpractice or lawyers professional liability insurance policy may have a Law ‘Firm’ Prior Acts Date, an ‘Individual’ Prior Acts Date, a ‘Career Coverage’ Prior Acts Date and/or ‘Predecessor ‘ Firm Prior Acts Date. Each can be used to address a specific coverage needs: 1.       Firm Prior Acts – As the name implies covers work on behalf of the named insured firm after a specified date.  This ...

According to the Miami Herald and the Florida Record, Erwin Rosenberg’s troubles started in 2006 when Rosenberg would not produce client documents in a lawsuit.  Circuit Court Judge Gerber ruled that Rosenberg had acted in bad faith and awarded attorney’s fees.  Even after the ruling Rosenberg refused to produce the client documents.  Rosenberg to this day has refused to pay the attorney’s fees.  The judge recommended a 91 day suspension, but the Florida Sup...

The Consumer Financial Protection Bureau (CFPB) was formed by the Dodd-Frank Act.  The main intent of the CFPB was to help consumers that were having issues with Banks, Lenders and other Financial Institutions.  CFPB jurisdiction includes banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial companies operating in the United States.  Recently a title agency was concerned about cover...

Question coming with frequency from lawyers; “Does attorney malpractice insurance cover my ‘marijuana practice’?” The short answer to this question is there is no specific exclusion in almost all lawyer’s professional liability insurance policies for a ‘marijuana practice’.  Longer answer gets complicated.  The attorney malpractice insurance policy objective is providing errors and omissions coverage when an attorney is accused of attorn...

With Christmas just around the corner and New Year not far off, many law firms’ partners and staff are getting ready to have a few well-earned days off.  Not to put a damper on the Xmas cheer, but many law firms’ also renew their attorney malpractice insurance at year end.  Safe to say that this is the busiest time of year, not just for Santa, but for malpractice insurance agents and underwriters everywhere, who are preparing and binding insurance terms for the coming yea...

A recent article from The Dentons, “You’re Facing a Malpractice Claim; Don’t Make it a Bad Situation Worse”, gives advice on what to do after the mistake has been made.  Every so often we have law firms that actually make things much worse.  Once an issue is known think and consult before you act making sure you do not react.  According to the Article things to remember: 1.       Not Every Mistake is Malpractice—Everyone...

Rescission of insurance coverage normally results from a material misrepresentation on the application for coverage.  But what does this actually mean.  There are a number of ways where issues come up that cause the malpractice insurer to want to get off of an exposure.  Rescission is the most extreme tool that an insurer has available to get off of a risk.  Here are the most likely tools that an insurer has to get off of an exposure: 1.      ...

Always hate to have to tell someone no.  This is an actual e-mail, minus names, places and insurance carriers that came in recently.  Question from Attorney: I have been an attorney for almost 30 years.  I handle personal injury and workers compensation cases for plaintiffs/petitioners (95% of my work).  I am currently an associate at my current Firm.  I started here around 6 years ago.  Prior to becoming a full time employee at my current Firm, I had my own solo...

Unlike many other types of insurance, Attorney Professional Liability Insurance cannot be bound without the malpractice insurer’s specific application.  Some malpractice insures will use a competing insurer’s new business application but this is the exception rather than the rule.  As an independent malpractice insurance agency we work with my different malpractice insurers and can use our one page ‘indication’ form to provide what is called a ‘premium...

According to Insurance Business, 6 Florida attorneys were arrested in September for participating in kickback schemes to defraud insurance companies.  They were accused of paying for referrals from tow truck drivers, auto repair employees and other people with access to collision reports.  The attorneys were alleged to have used these referrals to make fraudulent motor vehicle tort and personal injury claims. Florida attorney Steve E Slootsky plead guilty to 15 felony counts and has...

This is an important question if you expect your malpractice insurer to pay your malpractice claim.  Not properly insuring the attorneys can cause a claim denial.  Lawyers Professional Liability Insurance policies are normally written to cover the Law Firm.  By extension all of the attorneys and employees that work for the firm past and present are covered for covered work they have done on behalf of the ‘named insured’ firm.  But now for the catch. Axis Insu...

Recently blogged that L Squared turned 15 in 2017.  What you may not know is that L Squared is in 47 states and the District of Columbia. There are few independently owned professional liability agencies that can deliver the errors and omissions insurance for Accountants, Dentists, Lawyers and Title Agencies on a nationwide basis. Many agencies write insurance just about any risk that comes through the ‘door’ and are jacks of all trades.  That is fine if you have a home an...

As reported in the Insurance Journal, this is an example of why it is difficult to give a definitive answer about how much professional liability insurance coverage you need.  Granted this is an extreme example but $214 millions attorney malpractice suits do happen.   Even for a 450 member firm such as the former firm of Kaye Scholer this is a large demand.  It would be interesting to know what it settles for, but likely we will never know. For details on attorney malpractic...

  Lawyers chose to go without malpractice insurance believing because they work for a small firm and maintain close relationships with their clients they are immune to claims. Other attorneys believe that the chances of them facing a claim aren’t great enough for them to purchase a Lawyers Liability Malpractice insurance policy. The logic flaw is small firm lawyers have malpractice claims just like their more high profile peers in larger firms.  If a malpractice claim goes to ...

The purpose of a Risk Purchasing Group (RPG) was to allow like risks to be able to purchase liability insurance on a group basis.  In 1981 Congress enacted the Products Liability Risk Retention Act that allowed for groups to be formed purchasing liability (casualty) insurance on a group basis.  This federal law superseded many state insurance laws that prohibited the formation of specialized exclusive groups to purchase insurance.  The law only applies to liability insurance not p...

According to the BBC, Android Smartphones since 2012 been targeted by malware dubbed Dark Caracal.  The malware was designed to look like WhatsApp and Signal which had stolen gigabytes of data.  This malware was aimed at Attorneys, Military Personal, Activists and Journalists.  The stolen data ranged from call records, audio recordings documents and photos. Google states that it was confident that the infected apps did not come from the Google Play Store, but many users may have b...

Making a practice of suing clients for unpaid legal fees is like playing the lotto.  The more you sue the greater your chances of getting a retaliatory malpractice claim or disciplinary complaint. An attorney will state, “I want to get paid for the work that I do, so why does my Lawyers Liability Insurance carrier care?” Fee suits of clients are a leading cause of Lawyer’s malpractice claims.    From a malpractice insurers perspective if you sue enoug...

Professional Liability Insurance policies are normally written on a ‘claims-made’ policy form.  In its purest form, an unendorsed ‘claims-made’ policy only provides coverage for the current policy term for covered acts that occurred during and where the claim is made and reported during that policy term.  For professionals this is unworkable as many claims are discovered after the end of the current policy term.  Professional liability insurance policies ...

In speaking with malpractice insurers, what the insurers call ‘social media fraud’ in many cases is ‘The Friday Afternoon Fraud’.  Insurers refer to it as a social media fraud because cybercriminals lurk on social media looking for information that can be used in a hack.      With all the massive data breaches, these cases are on the rise.  Law Firm’s and client’s e-mail systems are being hacked at an ever increasing rate.  ...

Evidence to Impeach or an Ethical Breach? Interpreting how social media research aligns with the professional conduct rules   By Erin McCartney, Esq.   With social media being all the rage, many people are turning to their favorite sites to share the details of their daily lives. Willingness to disclose personal information in such a carefree manner could be particularly helpful in the discovery phase of litigation. Snooping on opposing parties, witnesses, or jurors through soci...

When one attorney in a law firm wants increased attorney malpractice limits but the other firm members do not want to pay the extra cost, what can the one attorney do?  It seems logical to allow one attorney to increase their policy limits. So if one attorney is willing to pay for increased limits either by an endorsement to their existing attorney malpractice policy or purchase an excess policy just for themselves is this possible? Unfortunately for the attorney wanting to increase their ...

When does misrepresentation or non-disclosure on the attorney malpractice insurance application cross the line between having coverage declined to having the coverage rescinded?   Having coverage declined because of properly disclosing application information is a problem.  As with many things in life addressing a problem honestly and promptly minimizes the damage.  But cover-ups are usually worse than the initial crime.  For coverage rescission, the application must cle...

This issue recently came up with a client who was trying to determine which insurer had ‘better’ coverage.  As frequently happens the client went no further than the declarations page to come to a conclusion. There is no standard Professional Liability Insurance Policy.  Attorney Malpractice policies may have similar coverages but the wording and how they are defined are all different.  Some insurers list more information on their declarations pages then other carrier...

Many law firms misunderstand as what is and is not covered when a firm has an ‘Of Counsel’ attorney working for them.   Attorneys continue to construct ‘creative’ relationships for attorney malpractice coverage under this mistaken belief.  Believing something is covered versus being covered are two different things. Of Counsel doing no work for the law firm Frequently law firms’ lawyers professional liability insurance policies have ‘Of Counse...

  Question from attorney: Does your insurance agency provide malpractice insurance for mediators? I have a litigation practice but am hoping to expand into mediation as a significant area of my practice.   Response: Mediation is normally defined as a professional service a lawyer would perform under most attorney malpractice policies.  As a lawyer performing other areas of practice you would not normally want to get just a specific policy that just covered mediation service...

When I asked why malpractice insurance policy premium went up, the agent stated that it was because of “step rating”.  What is step rating and why did my premium go up? Most malpractice insurance policies are Claims Made Policies.  And most Claims Made Policies are Step Rated.  If your 1st policy written has no prior acts coverage you can expect that by approximately the 5th year that your policy premium could double.  The premium increases for your malpractice i...

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It is amazing the problems an accounting firm or law firm can create for themselves by failing to notify their Malpractice agent/insurer of changes to the firm.  Malpractice Insurance Policies Require Timely Notification of Firm Changes. When Attorneys and Accountants come and go from a firm or a firm is dissolved or merged it is critically important to keep your insurer informed.  Many policies require this timely notification within 30 days of the event or as soon as practical. ...

This issue recently came up with a client who did not want a ‘burning’ the limits attorney malpractice policy.  The client went no further than the insurance proposal coversheet to come to a conclusion.  In this case the client assumed (wrongly) that Claims Expenses Outside the Limits meant that there was no separate coverage for defense costs.  Which would be a ‘Burning’ the Limits Policy. It is bad enough that Attorney Malpractice policies are not standa...

Hiring a suspended attorney by a law firm might not impact the law firm’s attorney malpractice insurance.  Hiring a recently reinstated suspended attorney to practice law will impact your attorney malpractice insurance.  So what is the distinction? This is the typical question that is asked on an attorney malpractice new business application.  Also there is a similar question on the ‘add attorney form’ when hiring a new attorney. “Has any lawyer in the ...

The ‘Directors & Officers’ and ‘Closely Held Entity’ Exclusions are two frequently overlooked policies exclusions for Attorney Malpractice.  Every attorney malpractice insurance policy has some restrictions/exclusions for this issue.  It is common for insurers to have a supplement to list the firm ‘clients’ that that an attorney is either an officer or director and/or has equity interest in.  Some insurers use the officers/director supplemen...

The Hammer Clause in a Malpractice Insurance Policy Question: An agent told me that my Attorney Malpractice Insurance policy has a ‘Hammer Clause’.  I looked in my policy and could not find it.  What is a ‘Hammer Clause’? Response: There is no malpractice insurance policy that actually states or defines a ‘Hammer Clause’.    It is insurance slang term for forcing you to settle a claim. Follow-up Question: Sounds like a bad thin...

We recently posted a blog concerning often overlooked coverage exclusions entitled, "Beware of the (s)".  This analysis of a court case posted on  February 21, 2017 by Andrew P Carroll, Emilio F Grillo and Seth L Laver highlights this issue.  The originally blog can be found on Professional Liability Matters   Attorney? Check. CEO? Check. Coverage? Unlikely. Some attorneys wear multiple hats. We have other interests, other business ventures, other opportunities t...

Attorneys dread doing their annual Law Firm Attorney Malpractice Applications.  It is non billable administrative time that takes away from the practice of law.  Depending on the firm this task may be handled by the Managing Partner; the beginning associate; or newest clerk in the office.  While expedient having the newest staff member complete the application it potentially opens the firm to denied claims and at worst or coverage rescission.  The finger pointing for a poorly...

A recent ABA article Entitled "Trump attorneys statement that he paid Stormy Daniels $130K raises ethics questions" by Stephanie Francis Ward raises the question, does a payment made by a lawyer using his own funds violate the rules of professional conduct?  Not sure we know enough of the story to judge.    Click Here for the entire ABA Story.    

As a former auditor, it always amazes me why people would risk so much for so little.  But they do and you read about these thefts all the time. The pressure is always on to outdo ones neighbor and provide the ‘good life’ to themselves, a spouse and/or kids comes into play with the need for some easy money.  The employee who feels underappreciated and undercompensated may look for ways to supplement their income.  Many times it is done just the ‘one-time’ ...

Attorney Malpractice insurance policies have a Retro Active date sometimes called a Prior Acts date.  But some attorney malpractice policies do not.  These attorney malpractice insurance policies are Full Prior Acts (FPA).  An FPA claims-made liability policy that does not contain a retroactive date will cover claims arising from covered acts back to the inception date of continuous claims made coverage for the firm.   And the difference means? Firm with a prior acts date: ...

By Seth L. Laver, Andrew P. Carroll and Sean P. Beiter  of Goldberg Segalla One of the most common problems facing a would-be plaintiff considering a malpractice case is when to file suit. Similarly, those that defend professionals must consider whether to move to stay proceedings if applicable. Especially with accountants and attorneys, causation and damages are difficult to calculate until the underlying matter has concluded. This means that the notoriously lon...

Suspended and/or disbarred attorneys want to obtain coverage to protect their past acts.  So it begs the question can a suspended attorney obtain an attorney malpractice insurance policy? Most attorney malpractice insurance policies have an outright exclusion for a suspended attorney.  Even without a specific exclusion, as a suspended attorney, they should not be performing any of the services defined as a professional service.  As such we know of no malpractice insurer that will...

The assumption that your attorney malpractice policy will not answer in case of a criminal complaint could be invalid.  A recent New Jersey court case was cited in Professional Liability Matters by Seth L. Laver, Andrew P. Carroll and Steven C. Capobianco of Goldberg & Segalla makes the point that assuming what your attorney malpractice insurance coverage is or is not can cost you money.  The New Jersey court ruled that the law firm’s malpractice insurer must p...

More than one attorney has been very upset to find that attorney’s fees are rarely covered under an attorney malpractice insurance policy.  Usually this realization comes after the claim is denied.  Included under this category of damages are civil or criminal fines, sanctions, or penalties ordered by a court or other administrative body.  In addition, demands for attorney’s fees to be returned to the client are not covered. Depending on the insurer’s Lawyers Pr...

Disciplinary Coverage is an additional coverage found on most admitted and some non-admitted Attorney Malpractice Insurance policies.  Some malpractice insurers that do not offer this coverage are willing to endorse it on if requested.  With Attorney Malpractice Insurance policies not being standard, this additional coverage can be called ‘Additional Coverages’, ‘Supplemental Payments’ , ‘Disciplinary Proceedings’, ‘Regulatory Inquiry Extensi...

This may be a misunderstood concept for claims-made insureds or just wishful thinking.  Just because an insured has a claims-made policy at the time that a claim is reported does not mean that there will be coverage for that claim.  Wait doesn’t a claims-made policy mean if the claim is ‘made’ and reported during the policy period the insurer should provide coverage?   All claims-made policies have a prior-acts date and a prior knowledge clause of some typ...

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A common misconception for law firms is when does the Attorney Malpractice Insurance policy coverage end once an attorney leaves?    Some firm’s rationalize that the Attorney Malpractice coverage for an attorney continues until the end of the policy term because it is paid for.  Once an attorney leaves a law firm their work after they leave the firm is not covered.    That attorney will need to purchase a new policy or be added to their new firm’s...

Recent Article in the ABA Journal.  Certainly a different way to market for new clients. Some lawyers are irked by attorneys fake bar associations BY DEBRA CASSENS WEISS A Louisville lawyer is creating some bar associations on paper that have no actual members. One of entities created by personal injury lawyer Richard Breen is the Shelby County Bar Association, though it’s not actually in Shelby County, the Louisville Courier Journal reports. The bar association ...

Even though the insurer is no longer writing malpractice insurance the coverage for an issued Extended Reporting Period Endorsement (Tail or ERP) remains in force.  With this stated, as the years go by your insurer could have merged, been sold, liquidated or gone completely out of business.  Many times your insurance agent should be able to locate the proper insurer to report a claim. And if another  insurer as assumed your old insurer’s line of business that new insurer sho...

Question from Client: Is this Attorney Malpractice Insurance Policy Extended Reporting Period Endorsement (ERP or Tail) Full Prior Acts? Response: A common misconception is that there is a separate policy issued once an ERP is purchased on for an attorney malpractice insurance policy.  This is not the case.   Generally the endorsement is just one sheet of paper with only one or 2 paragraphs.   A lot of money spent for one sheet of paper. With an ERP there is no a sep...

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Risk Management Tip from Travelers Insurance March 2018 News Letter: Steps to Take at the Inception of Each Client Engagement to Avoid a Malpractice Claim Any client who is unhappy with a law firm’s representation is a potential plaintiff in a subsequent legal malpractice action. Thus, as a preliminary matter, a lawyer should analyze a prospective client and the potential matter prior to engagement, in an effort to minimize the risk of a future disciplinary action, legal malpractice act...

Request from our Client: Need to add a temporary increased limits ‘rider’ to my Attorney Malpractice Insurance Policy to cover a large real estate deal for a client. Response: The term “rider” is normally associated with life and health insurance policies.  For property & casualty policies you add endorsements to policies, but on the request. Attorney malpractice policies are written on a ‘claims-made’ policy form.  With a claims-made policy,...

I hate this discussion with attorneys.  As with many things in life there is no right answer.  Everyone likes ‘free’.  But ‘free’ does not always mean that there are no strings attached.   Attorney Malpractice Insurance for solo practitioners ‘free’ retirement tail can be a great benefit.  In most attorney malpractice insurance policies the retirement ‘tail’ is often referred to as a non-practicing extended reporting p...

Claim Study:  Failure to Investigate Client’s Potential Sources of Insurance Coverage Curiosity of Travelers Insurance Company One of the initial issues that a civil litigator retained to provide a defense should consider is whether the client has any insurance coverage that might be responsive to the claim or suit. Even in a situation in which indemnity coverage, coverage for damages awarded against the client, may be denied, an insurance policy may nevertheless provide separate co...

It’s important to encourage your staff to improve client relationships whenever possible. Surprise your staff with gift cards or a catered lunch when you see them go above and beyond for a client, or if they consistently assist you with providing great client relations. Reprinted from AttPro Risk Management Tip of the Month.  www.attorneyprotective.com

Given the issues with claims-made insurance for attorney malpractice insurance thought and planning on how to handle the attorney malpractice exposure should start prior to the split.  If your two person law firm is splitting up and each going separate ways, the best approach for the firm is to Purchase an Extended Reporting Period Endorsement (ERP/Tail) at the time the split occurs.  The ERP endorsement is attached to your last attorney malpractice insurance policy extending the repor...

What professional liability limits should a law firm carry is a frequently asked question.  It’s difficult for an insurance agent/broker to answer.  The broker simply does not know your law practice well enough. There is no set answer for a law firm.  Best answer is given the type of practice a law firm has and the type of clientele, if you make a mistake how much could it cost? Here are some of the issues to consider: Even knowing  the type of practice areas criminal...

Many attorney s refer cases.  Some firms do no real legal work and refer out almost any case that comes their way.  For law firms with this business model they should read ‘Court Castigates the Solicit-Then-Refer Model’ by Seth Laver.   The rest of this blog is for the attorneys that occasionally refer out cases. When attorneys refer cases they need to be aware of the risks associated with these referrals.  Over the years we have seen malpractice claims repo...

This is a frequently asked question.  Attorney takes the “free” non-practicing Extended Reporting Period Endorsement (ERP/Tail) on his Attorney Malpractice Insurance Policy and decides to start practicing law again at a later date.  What is the impact on the ERP?   In most circumstances once the attorney starts to practice law again the “free” retirement ERP becomes null and void.  Given the claims-made nature of Attorney Malpractice Insurance poli...

Attorney Malpractice Insurance Policies are written on a ‘claims-made’ policy form.  A claims-made policy form requires that the covered act must be reported (claim made) during the policy period or during the extension of the reporting period (ERP/Tail).  Many Attorney Malpractice Insurance Policies provide for a “free” retirement or non-practicing extension of the reporting period (ERP) if the attorney has been with the insurer for the required number of years...

Many claims that we see come from FDCPA complaints.  This statute has been around for 40 years and these claims can be costly which is why collections is regarded as one of the higher risk areas of practice for attorneys.  The following question was sent to AskWilliam@Travelers.com about the FDCPA and who is subject to it.  This question and response is from the March 2018 Travelers Newsletter, “The Better Lawyer”. Ask William: The Fair Debt Collection Practices Act ...

Claims-made insurance is often misunderstood.  This misunderstanding can be costly. All Attorney Malpractice Insurance policies issued in the USA are written on a ‘claim-made’ policy form.  With claim-made coverage, once policy lapses, so does your past acts coverage.  Often the confusion comes from assuming that an Attorney Malpractice policy is just like your Business Owner’s Policy (BOP) or your Homeowner’s Policy.  A BOP or Homeowner’s Policy...

Attorneys become upset when they find out that suing clients for unpaid legal fees can cause their attorney malpractice insurance premiums to increase.  In fact, with many admitted malpractice insurers as few as 5 client fee suits for unpaid legal fees in a 2 year period causes the insurer to either decline, non-renew your insurance or place restrictive policy exclusions on your policy. When an attorney states; “I want to get paid for my work, so why does my attorney malpractice...

There are many reasons that a person or entity might want to provide funding helping a plaintiff pursue a commercial lawsuit.  It can be for personal reasons such as promoting a cause or settling a score.  But most litigation funding is now coming from professional  3rd parties that make a business on betting which cases will be successful.  The funding can be in the form of 3rd party financing in exchange for a portion of a successful verdict.  It can also be in the f...

Along with attorneys not understanding claims-made insurance coverage and the need to protect past acts, more than one attorney has ‘top sheeted’ their policy determining they have 60 days past expiration to renew or get new coverage because of the 60 day  ‘Automatic’ Extended Reporting Period (ERP).  Nothing could be further from the truth.  This mistake will bit you. The attorney malpractice insurance policy ‘Automatic’ 60 Day ERP provision d...

Question: I am told my Attorney Malpractice Insurance Policy has a ‘Hammer Clause’—What is a ‘Hammer Clause’? Response: There is no attorney malpractice policy that actually states or defines the term for ‘Hammer Clause’.  The ‘Hammer Clause’ is insurance slang for an Insuring Agreements or a Defense & Settlement Section that forces the insured to settle a claim. So how does a Hammer Clause work? Even though the insurer will no...

Law firm has a client(s) with business in many states, but their insurance carrier is only licensed in one of those states.  We have actually helped law firms having 3 different policies in 3 different states. This is a particular problem that many Attorney Malpractice Mutual Insurers have.  Some are only licensed in their domiciled state.  Often times they require the law firm if they are going to accept clients in another state to get a 2nd policy for that state.  This...

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In Wesco Insurance Co v Layton, Texas attorney Ledford E White took out an attorney malpractice insurance policy with Wesco for the policy term of March 14, 2014 to March 14, 2015. White had maintained malpractice insurance coverage since 1997 through various malpractice insurers. Wesco had not written the prior policy term for attorney White. On August 16, 2013, attorney White’s client, the Laytons, filed suit against attorney White alleging fraud and attorney malpractice....

In a previous blog, Attorney Malpractice—Substance Abuse the Practice of Law’s Dirty Little Secret, we detailed attorney’s struggles with substance abuse.  The ABA just documented another attorney whose practice of law has been cut short by his drinking.  His dependence on alcohol was so great that he even showed up at his disciplinary hearing impaired. If you need help or know of someone with a substance abuse problem contact your health professional, your local a...

    According to USA Today, New York Suffolk County District Judge is accused of repeatedly breaking into his neighbors house and stealing the 23-year-old daughters underwear out of the clothes hamster.  

Attorney Malpractice Insurers cap their exposure to losses through a variety of means.  One is by limiting the limits an insurer will post for a single law firm.  All attorney malpractice Insurers carry reinsurance helping to limit their exposure to “shock” losses.  Reinsurers in their reinsurance treaties dictate to the primary insurer the firm types written under the treaty and the limits that the reinsurer will reinsure.  The reinsurer also wants to limit their...

Moving a law practice can open up an exciting new chapter.  But make sure to add insurance to your moving checklist.  As with the practice of law, property and casualty insurance is regulated by each state.  Insurers and insurance policies by state can differ.  To prevent coverage gaps make sure that you notify all of your property & casualty insurance carriers and /or agents, including your attorney malpractice insurer as soon as possible.  Do not wait until renewal...

On June 8, 2017, we blogged about a US District Court case, Gonakis v Medmarc Casualty Insurance Company.  In this case the District Court granted a summary judgement for Medmarc Casualty stating that because of ‘prior knowledge’ of the claim and not disclosing this claim to Medmarc prior to purchase of the claims-made Medmarc Policy, that Medmarc was not liable for the claim.  And now for the rest of the story… Attorney Gonakis appealed this decision and the US 6th...

As an accountant and auditor through the years of working with attorneys and seeing some of the claims reported because of lack of controls I have always been amazed.  More than one attorney has decided that they only want to ‘practice law’ and leave the ‘business side of the law’ to lessors.  It is amazing to hear a sole practitioner state that it wasn’t his/her responsibility that his ‘trusted’ employee had stolen hundreds of thousands of dol...

As a law firm evolves through the years, its insurance needs may change.  Changes in a firm’s practice areas and clients might require different liability insurance limits than the firm required in the past.  Raising policy limits to meet a law firms needs causes no coverage issues.  But lower liability policy limits can cause unforeseen consequences.  Attorney Malpractice Insurance policies are written on a ‘Claims Made’ or ‘Claims Made and Reported...

Law firms often finance their attorney malpractice insurance with a premium finance company.  It is a good way to manage cash flow.  Problems happen though when a law firm allows their attorney malpractice insurance go into cancelled status with the finance company for premium nonpayment.  Law firms need to realize that the premium finance company as part of the agreement to finance attorney malpractice insurance is given a power of attorney to cancel the coverage for nonpayment. ...

Insured asks: What is ‘Step Rating’?  I did not find term defined or mentioned in my policy. Response: Attorney Malpractice Insurance policies are written ‘claims made’ policy form.   Most Claims Made Policies are Step Rated.  At policy inception of a law firms 1st ‘claims made’ Attorney Malpractice Insurance policy there are no past acts to cover.  With only the inception year’s exposure, premiums are relativel...

New York Attorney M Scott Vayer was admitted to practice law in 1980.  Somewhere around 2001 Vayer stopped reregistering with the Office of Court Administration (OCA) because of the stresses in his life prevented him from being able to complete his CLE.  He had good intentions of getting caught soon after 2001, but as time went by the task of getting his CLE current became “overwhelming”. Even though he had not registered and/or gotten current with his CLE he continued to...

Attorney Malpractice Insurance Policies do not have standard wording but a common exclusion is for excluding awarded attorney’s fees.  As attorney’s fees can run in the hundreds of thousands of dollars or more this can be a significant surprise if the firm is not aware of this exclusion.  More than one firm has become very angry when coverage is declined for this.  Normally attorney’s fees are carved out of the policy wording. Even though it is ‘excluded&r...

Attorney Malpractice Insurance policies use no standard form.  Even though the policy wording is different, they generally cover the same risks and exposures.  But as the saying goes, ‘the devil is in the details’.  Case in point is the definition of “an insured”.   Most polices cover current attorneys, employees and partners along with past attorneys employees and partners under the firm’s policy.  There are normally reporting requirem...

Attorneys do not question the need to back-up their computers or phones, but a few have a real problem with getting a backup attorney.   Not sure how a computer or phone’s data is more important than the attorney. From a malpractice insurer’s viewpoint a solo practitioner having a backup attorney is essential to help mitigate preventable legal malpractice exposures.  The backup attorney can step in when unexpected circumstances to the insured attorney makes it imposs...

Question from Law Firm: Law Firm’s Managing Partner states, “My Travelers Attorney Malpractice Insurance Agent tells me that it is going to cost 3 times expiring to buy an Extended Reporting Period Endorsement (ERP or Tail).  Our law firm is merging with another firm and is required to have an ERP.  The cost is a lot higher than I expected.  I am shopping for a better price.” Response: Shopping is the American Way.  But shopping for an ERP is a waste of t...

When completing the attorney malpractice insurance application a frequent question is how to fill out the area of practice grid (AOP).  I suspect that it is frequently done incorrectly. For firms that are currently in operation for over a year: The attorney malpractice application AOP grid asks for your AOP for the past year in 1 of 2 different methods: 1.       either a percentage of billable hours or; 2.       a percentage o...

Question from Attorney: I am contemplating merging my practice into another firm and becoming "of counsel" to that firm.  I may have a legal matter or two that is not included in the merger, and I will be retaining the existence of my current LLC My question is this:  can I maintain legal malpractice insurance that covers me for both the legal matters that are merged with the other firm, and the legal matters that are not merged?  How can we make this work? Response to Attorney...

Question from Attorney: Will you write an Attorney Malpractice Insurance Policy for me without prior acts coverage?  I currently have prior acts coverage and want to renew without any prior acts coverage to save money.  I do not want to purchase a Tail or Extended Reporting Period Endorsement from the incumbent insurer. Response: Attorney malpractice insurance is written on claims made policy form.  Voluntarily renewing without prior acts coverage means dropping insurance cover...

Question from Law Firm: My Attorney Malpractice Insurer just non-renewed my policy because of a claim,  now all I can get is ‘Surplus Lines’ or ‘Non-admitted’ insurers for a much higher premium.  How many years after a Legal Malpractice claim do I have to wait to get back with an ‘admitted’ Attorney Malpractice Insurer? Response: There is no set answer to this question.  Unfortunately for law firms with claims one of the best predictors of fu...

We post on client fee issues frequently.  Why, because it is a leading cause of attorney malpractice claims.  Avoid fee disputes by explaining the fee arrangement in great detail during the first meeting.  Confirm this understanding in writing and have the client agree by signing the agreement. When billing the client, ensure there is enough detail in the bill to allow the client to understand everything you are doing on their behalf. Use simple terminology and avoid abbreviatio...

We all get those calls that you have won the lottery or a cruise to the Caribbean.   Normally you always hang up.  But imagine if the call was legit.  According to an ABA Journal and Wall Street Journal Article that is precisely the problem the West Virginia Law Firm of Bailey & Glasser has. Firm lawyer John Barrett won a $20.4 million class action settlement against Dish Network.  He and his staff are attempting to call members of the class to let them know tha...

A Risk Purchasing Group (RPG) allows like risks to be able to purchase liability insurance on a group basis.  Formed by Congress in 1981, the Products Liability Risk Retention Act allowed the formation of groups to purchase liability insurance on a group basis.  This federal law superseded many state insurance laws that prohibited the formation of specialized exclusive groups to purchase insurance.  The law only applies to casualty or liability insurance not property insurance.&nb...

This case started out as an historical American submarine copyright infringement suit that should have never been brought.  Once the fuse is lite it is hard to put out.  We recently blogged about Attorney’s Fees not being covered by Attorney Malpractice Insurance.  In the Federal District court case of Leary v Manstan the Judge just awarded Attorney’s Fees to the defendant of $108,000, on March 27th, 2018. As noted in the transcript the reason for the suit was that, &...

Yesterday we blogged about client selection and how client selection helps prevent Attorney Malpractice Claims.  Today we have a Monkey attempting to file a copyright infringement suit against a photographer.  PETA decided that it was time to help an Indonesia Macau Monkey named Naruto protect his rights to the “Monkey Selfies” that he took in 2011. In 2011 Naruto got ahold of photographer Slater’s camera and took a number of “Selfies”.  PETA ...

Tough call, you found this terrific attorney that would be a great fit for your firm.  The attorney’s prior firm(s) work experience and skills are exactly what your law firm needs.  The attorney is concerned about the prior firm surviving after departure and has asked if you will pick up this prior acts exposure. When asked about adding prior acts, as an agent trying to minimize a law firm’s attorney malpractice exposure, we generally advise against.   Here is wh...

Some law firms are reluctant to report small claims.  Many times the law firm feels that the legal malpractice claim is small and they can cover it themselves.  These strategies will help their insurance history thus keeping their attorney malpractice insurance premiums lower.  But there can be expensive long term consequences to this strategy. For property insurance this strategy makes sense.  With a property claim generally you know with great certainty the amount of damag...

Lawyers that choose to go without malpractice insurance believe that because they work for a small firm and maintain close relationships with their regular clients, that they are immune to claims. Other attorneys believe that the chances of them facing a claim aren’t great enough for them to purchase an Attorney Malpractice insurance policy. The flaw in this logic is that small firm lawyers are just as likely to have a malpractice claim as some of their more high profile peers. Many small ...

Normally there is confusion at the Law Firm’s office when a request comes in to add a certificate for a mortgagee to an attorney malpractice insurance policy.  While we do write many firms’ business owners coverage (BOP) and are happy to add the mortgagee to a BOP; we decline when it is specifically for the malpractice insurance.  This is a recent request received for adding a mortgagee:  “Please can you send me a Certificate of Liability insurance for our cl...

Most Attorney Malpractice Insurance policies have exclusions for outside interest in other businesses that may or may not be a firm client.  This is one area that attorneys need to be careful about.  Every insurer’s malpractice policy has different wording.  Most of the time the policy wording differences are not a concern, but this is not the case with policy exclusions for outside interests.  Where one outside relationship may be covered by one insurer, is excluded by...

This often asked question only comes from the attorney that might be paying more than his friend.  I say might, because occasionally they are both paying the same premium.  But there are other cases where the premiums are dramatically different.   Because of insurance privacy laws, we cannot share insurance information to anyone about someone else’s insurance application or policy.  Nor will we without a signed release or a court order.   Both attorneys may ...

Attorney in Washington state had a continued history of double dealing with her firm. After being fired for the practice she mislead her new employer and continued the same arrangement with individual clients outside of her firm.  For that and many other sins she was disbarred.   (See the Court Opinion) For the rest of the story, read on: Washington Attorney Carllene M Placide was a non-equity partner at the law firm of Dorsey & Whitney with a base compensation of $225,000...

According to the Orange County Register, California Defense Attorney James Crawford got into a brawl with District Attorney Investigator Dillon Alley on the 10th Floor of the Santa Ana Courthouse.  There were conflicting stories about who started the brawl.  Different witnesses stated that each party had thrown the first punch.   Attorney Crawford had sued Alley for $10 Million over the brawl.  Alley counter claimed.  The jury awarded Alley $250,000 in punitive dam...

In Burton v Kohn, John H Burton filed a Fair Debt Collection Practices Acts (FDCPA)/Wisconsin Consumer Act (WCA) against Kohn Law Firm SC and Unifund to avoid paying a debt.   This all started in February 2015, when Kohn Law Firm on behalf of Unifund filed a lawsuit in Brown County Circuit Court to collect a debt against Burton.  Burton stated that he had no knowledge of the credit agreement and filed a counterclaim alleging Kohn had violated the FDCPA/WCA by filing the complaint with...

Come visit Mandy & Beth at our booth at the Annual Michigan Association for Justice Convention!

Because attorney malpractice insurance is written on a claims made policy form the prior acts date is important to determining if there is coverage for an act that may have occurred many years ago.  The first three things that an insurer looks at to determine if the claims made policy covers the loss are: 1.       Was the claim reported during the policy period? 2.       Did the act occur after the prior acts date? 3.  ...

Year after year you are required to complete a malpractice application.  It is enough to make you want to scream.  Accountant and attorney malpractice insurers generally want an updated application every year.  But Business Owners, Workers Compensation and Commercial Auto insurers renew each year without an application.  Why the difference? The exposures for Business Owners, Workers Compensation & Commercial Auto rarely change much from year to year.  Policy premium...

Many people have no idea what Insurance Carrier Loss Runs are.  Plus who wants to discuss or disclose malpractice claims just to get an insurance quote.  Why won’t an insurer just quote without this information? Insurance carrier loss runs are a report(s) that shows claims reported to a malpractice insurer during the time the firm was with the insurer.  The loss run report can be generated by the insurers claims department or underwriting department.   The firm be...

Question from Attorney: I am still looking at alternatives for renewing my attorney malpractice coverage and cannot get firm terms until I get Insurance Carrier Loss runs from my incumbent insurer.  If I am a “few” days late renewing coverage is that going to be a problem?  I have a “grace” period.  There is a “grace” period, right? Response: Letting your Attorney Malpractice insurance lapse has consequences.  Attorneys sometimes see the...

Firms get trapped by the sin of omission when completing the malpractice claims questions.  This can happen with either the incumbent malpractice insurer’s renewal application or a new business application with a different insurer.  “Prior Knowledge” of a claim is a leading cause for malpractice claims denials.  Remember whether intentional or by accident, misinformation on a malpractice application can be used against you in a court of law. Failing to report po...

I was meeting with the partners of a medium sized insurance defense law firm a few years ago, trying to understand why they were paying what seemed about 3 times what the attorney malpractice premium should be.  According to the practice area grid (AOP) the firm did 100% insurance defense.  But when we got to the claims questions, they had a family law malpractice claim.  In reviewing the loss runs the indemnity payment was over $500,000.  My next question to the partners was...

Attorney malpractice policies are not standardized.  There is no ISO attorney malpractice policy form.  Some law firms attempt to address the policy coverage differences by having an agent do a side by side policy comparison.   Unfortunately these comparisons are normally useless in finding a specific issue for a specific law firm’s practice.   This leaves insureds with additional due diligence needed when adding new clients, changing insurers or the insurer c...

A number of years ago a law firm was being non-renewed by their current attorney malpractice insurer because of claims severity and frequency.  This meant that it was prohibitively expensive to find a replacement attorney malpractice Insurance policy that covered their prior acts.  This 13 member firm was looking at premiums with prior acts of over $350,000 for a $1million of coverage.  Without prior acts the premiums were around $125,000.  The ERP was going to cost over $100...

Attorney Malpractice policies are written on a claims-made policy form.  With claims-made policy forms, when the policy terminates so does the coverage and there is no coverage for claims reported after the coverage termination date.  The answer to this issue is an Attorney Malpractice Extended Reporting Period endorsement (ERP) should be purchased when a firm is closing and there is no successor firm.  As the ERP is an endorsement attached to the last policy in-force, the in-forc...

Attorney Malpractice Extended Reporting Period Endorsement (ERP) premiums are a multiple of the policy that is inforce at the time the coverage is terminated.  So if the premium is $20,000 and the firm purchases an unlimited ERP that the insurer has a multiplier cost of 3.5 the cost of that ERP is $70,000 (20,000*3.5). If you have an 8 member firm at the time the final malpractice policy was written $70,000 divided by 8 costs $8750.00 per member. Some insurers refund premiums when membe...

We have discussed a number of issues with Extended Reporting Period Endorsements (ERP or Tail) recently.  One that does not come up often is the remaining ERP policy limit.  Remember that an ERP is attached to the last inforce policy.  The ERP does not change the terms of the policy or reinstate limits that may have been used during this policy term. A little background claims-made insurance 101  Most focus when purchasing coverage on the liability policy limits.  Alm...

You have seen the sales pitches that this offer is available for a limited time only.  Most claims-made insurance policies give the right to an insured to purchase an Extended Reporting Period Endorsement (ERP or Tail) have very specific deadlines and requirements.  There is no underwriting that takes place and except for very limited circumstances the right to purchase the ERP cannot be taken away by the insurer.  But the right can be lost by the insured.  The right to purch...

A frequently asked question is what is the purpose of an ‘Innocent Insured Clause’?    The Innocent Insured Clause’s purpose is to provide coverage for individuals that are members of the firm for deliberate acts that normally would be excluded from coverage as long as those individuals had no knowledge and/or did not participate in the acts.  For instance, if one firm member embezzled client money, the embezzlement act would normally be excluded from cove...

Who wouldn’t want a legal malpractice insurance policy that wiped out the deductible?  To make doubly sure that you never have to pay a deductible, why not have an policy that has a zero dollar deductible and 1st dollar defense.  This is why you cannot have both. 1st dollar defense (FDD) is also called a loss only deducible.  Whichever name is used they mean the same thing.  Certain malpractice insurers will offer FDD.   With FDD the insured is only respons...

Not all insurers offer “Career Coverage” for attorney malpractice insurance.  But “Career Coverage” is a useful option for an attorney that is joining a new firm and had attorney malpractice that is being terminated with an old firm.   “Career Coverage” provides coverage for past acts that occurred with another law firm by extending the prior acts date to a date that is before joining the current firm.  Malpractice coverage is then provided...

Attorney Asks: Why did my attorney malpractice premium not go down at renewal?  I’m switching to all criminal work which I know is a lower risk area of practice, but the renewal application only wants to know what was done for the past year.  I told insurer that I want the practice areas changed to criminal anyway.  I want a lower rate this year or I want a new insurer. Response: The legal malpractice insurance application is meant to capture what was done on retrospectiv...

Before your law firm’s malpractice insurance coverage sails into the sunset the wise professional considers purchasing an Extended Reporting Period Endorsement (ERP/Tail).  Many people think that a separate policy is issued once an ERP is purchased for a legal malpractice policy.  This is not the case.   Generally the ERP endorsement is just one sheet of paper and one or 2 paragraphs long.  There is not a separate policy issued.  The ERP is attached to the las...

The 2018 annual Ames & Gough survey used data provided by nine leading attorney malpractice companies that write approximately 80% of the attorney malpractice sold to law firms.   The key findings of the survey were: 1.       Conflicts of Interest was leading cause of malpractice claims because of inadequate controls 2.       Defense Costs continue their rise caused by e-discovery and rising defense attorneys fees 3.&n...

Question from Attorney: Why do I need prior acts coverage for Attorney Malpractice Insurance?   Response: Lawyers Professional Liability Insurance is written on a ‘Claims-made’ policy form.  ‘Claims-made’ coverage in its purest form would only provide coverage for covered acts that that occurred and were reported during the policy period.  Generally the policy period for Attorney Malpractice is written on an annual basis.    Many attorney mal...

Everyone wants an accurate attorney malpractice insurance quote.  Remember it is not just the premium quoted that matters, but the coverage provided by that quote.  No one wants a low premium that does not provide the proper insurance coverage.  While the attorney malpractice application is essential for underwriting and quoting a law firm, the declarations page with the policy endorsements completes the reminder of the picture.  Remember once you switch claims-made policies ...

These are the clients from hell.  And unfortunately you are not immune even if you decline to represent the client or they were the opposing litigant.  Next thing you know you receive a notice that you have been filed upon for malpractice.   A few of these folks file these suits hoping that you will not respond and then collecting upon you.  They are basically professional litigants. What every their motive, we get asked this question way too often.  The attorney e...

Based on a recent Lawyers Professional Liability Insurance Conference in Law Vegas, Argo Pro’s Kim Noble released its Top 6 Liability Risks for Lawyers: 1.       Cyberattacks—As reported in our Blog, in 2017 22 Percent of the law firms reported a Cyber Attack.  This is up from 14% in 2016. 2.       Privity Laws--Current case law shows a trend away from strictly adhering to privity laws, making it unclear how far an at...

Insurers look at 2 things when setting rates; frequency & severity of claims.  There is some caution with producing a list as different time periods and different jurisdictions can change these practice areas.  For example, up until 2009, residential real estate and title agency coverage was considered a preferred area of practice.   Even though the losses from the financial meltdown have passed; real estate is still considered a much riskier area of practice.  Est...

Danger Zones: Preventing Legal Malpractice in Everyday Practice December 12, 2018 Most lawyers understand the importance of their reputation and avidly work to build and maintain a good one. So, it can be unsettling when a lawyers work product or reputation is called into question. Lawyers who understand the prevailing risks accompanying the practice of law are in a better position to avoid them. Matthew Marrone, Esq., Partner of Goldberg Segalla LLP, and Seth Laver, Esq., Partner of Goldber...

Individuals that have not had a claims-made policy often do not understand the importance of maintaining prior acts.  Many think it is just a ploy for the insurer to collect more money.  The reality is that claims-made insurance policies are almost worthless without the proper maintenance of prior acts coverage.  The previous blog outlined why you need prior acts.  This blog continues that explanation. Claims-made insurance policies are designed to provide coverage for ...

The conundrum some attorneys face is that after they retire, they really did not want to fully retire.  An old client or a new client comes along and wants the attorney to do some part-time legal work.  While a free non-practicing Extended Reporting Period Endorsement (ERP)Tail is a valuable endorsement, it can be made worthless.      Here’s How:   Attorney takes the “free” non-practicing Extended Reporting Period Endorsement (ERP/Tail) on hi...

An attorney can do the darnedest things to ensure that they get their claim denied.  Attorney Malpractice insurance policies are claims-made and reported policies.  Remember insurance policies are contracts.  Not understanding your coverage is not a defense for getting a claim denied.  Not following the contract after the claim can negate a covered loss.  Over the years through ignorance or deliberate acts here are some of the ways that attorneys have gotten their clai...

Legal malpractice policies sold in the United States are claims-made policies.  Conceptually the insurer that is on the risk is the insurer and policy form that will defend the insured and pay the claim should a claim be made during the policy period, providing that the reported act occurs after the prior acts date. Some malpractice policies also have a ‘knowledge date’ in addition to a prior acts date for their claims- made coverage.  Professional liability insurance poli...

A common administrative error that causes many attorney malpractice claims involves statute of limitations issues.  By one estimate at least 1 in 5 attorney malpractice claims involves a statute of limitations being missed.  While determining the statute of limitation in a given state is relatively easy.  Applying it to the facts involved can be tricky. In the case of Hahn v Dewey & LeBoeuf Liquidation Trust in 2012, $7 million was demanded by the IRS. The plaintiffs sta...

To the dismay of insureds, there is no such thing as an ‘All Risk’ insurance policy.  If you have an insurance agent tell you that this is an ‘All Risk’ policy with everything covered run do not walk to the nearest exit.  Case in point is the insured v insured exclusion in a legal malpractice policy. Sometimes disputes happen between attorneys in a law firm.  Even to the point of filing malpractice claims against each other.  Lawyers Professional Liab...

A legal malpractice claims-made insurance error policy may have a Firm Prior Acts Date, an Individual Prior Acts Date, a Career Coverage Prior Acts Date and/or Predecessor Firm Prior Acts Date. The different prior acts types address specific coverage needs: 1.       Firm Prior Acts – As the name implies covers work on behalf of the named insured firm (entity) after a specified date. This can be an actual date or may state ‘Full Prior Acts.’ ...

Suits for fees are one of the leading causes of attorney malpractice claims. Studies suggest that 33% of all malpractice claims are due to fee suits. The larger the percentage in over 90 days past due receivables, the more likely the firm will have issues when they try to collect the past due amounts. These issues can lead to attorney malpractice claims and bar complaints. There are steps that law firms can take to make sure to minimize the need for having to sue a client for fees. 1. &nbs...

Suing clients for unpaid legal fees can cause your attorney malpractice insurance premiums to increase. With admitted insurers as few as 5 client fee suits for unpaid legal fees in a 2-year period causes the insurer to either decline, non-renew your insurance or place restrictive policy exclusions on your policy. Insurers’ data shows that client fee suits cause legal malpractice claims. Fee suits cause counter claims, cross-complaints, and/or disciplinary complaints. If you sue enough c...

A law firm with claims, disciplinary activity, insurance coverage non-renewed, or rescinded, plan to provide insurance carrier loss runs for quoting and/or binding new coverage. Insurance carrier loss runs report(s) show claims reported to a malpractice insurer during the time the firm was insured with that insurer. Insurer claims and underwriting departments generate loss runs. The firm should obtain the loss runs directly from the insurer(s) or agent(s) that formerly wrote the malpractice in...

Legal Malpractice Insurance premiums start at about the cost of a weekly trip to for coffee at your favorite café. So, is the cost of a weekly cup of coffee worth it? Attorneys going bare are in the mistaken belief that their close relationship with clients makes them immune to claims. Chances of facing a claim may be low for any one year, but today over a career it is tough to not have at least been threaten with a malpractice claim. Consider that if an allegation goes to trial that t...

Step Rating  is not defined in legal malpractice policies. Step rating is the major premium increase cause in the first one to five years of continuous claims-made insurance coverage. With claims-made coverage the only policy that you can report a claim to is the current inforce policy. Maintain the established prior acts date at inception of the 1st claims made policy need for subsequent renewals. The prior acts date determines how far back the current insurer will cover. Legal malprac...

Two attorneys are comparing the cost of their legal malpractice insurance for their law practices. One attorney is dismayed because their law firm insurance policy is twice the cost of the other law firm.  Given that the firms have the same number of attorneys and both law practices are similar how can this be? There are cases where the premiums are dramatically different. Both law firms may be with the same insurer. There are times when slight application and law practices differences r...

Knowing what is and is not a coverage illusion in a legal malpractice policy helps determine your other insurance needs. Protecting the ‘business side of the law,’ the firm needs business owners, workers compensation, and cyber insurance. But these commercial insurance policies exclude the ‘practice side of the law’. Claims-made legal malpractice insurance policies protect the ‘practice side of the law’.  Typically, a legal malpractice policy covers ...

Attorneys that are not law firm staff or members may share common office space. But those attorneys should not have an expectation of using the law firm’s insurance coverage. The Hanover policy defines the Named Insured as: Named Insured means the sole proprietor, entity, partnership, or corporation designated on the Declarations page. Insured, also referred to herein as You or Your, means the Named Insured and: 1. Any Predecessor Firm; 2. Any individual, who was, is or becomes an ...