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    Lawyers, Attorneys Professional Liability & Malpractice Insu

    Posted by Lawyers, Attorneys Professional Liability & Malpractice Insurance on 5/02/06


    Regardless of the nature of your firm's practice, today's
    lawyer and law firm is themselves ever more frequently the
    target of allegations of legal malpractice. While such
    claims used to be relatively rare (after all, most lawyers
    are reluctant to sue other lawyers), they happen today
    with increasing regularity. In fact, some law firms are
    now specializing in representing plaintiffs in legal
    malpractice cases.
    It's not just your clients you have to worry about,
    either: Federal and State regulatory agencies, corporate
    shareholders, even third-parties can and do file lawsuits
    accusing lawyers of all types of professional negligence.
    There have even been recent cases in which law firms have
    been targets of class actions, including RICO allegations!
    Sometimes, of course, this is the result of an honest
    mistake or misunderstanding. At times, it is a result of
    unreasonable or unrealistic client expectations; sometimes
    it is simply due to a misunderstanding or a failure to
    communicate; and of course, in some cases, the claim is
    false, frivolous . . . or outright fraudulent.
    Whatever the circumstances that result in a claim of
    legal malpractice, the reality is that such claims have
    risen significantly over the past 10 to 15 years, in terms
    of both sheer numbers, and the magnitude of the damages.
    Regardless of the size of your firm, it is critical that
    you protect yourself, your firm, and your personal and
    business assets, with a properly underwritten policy of
    lawyers' professional liability ("LPL") insurance. The
    best way - indeed, I would suggest that it is the only
    way - to be certain that you have the broadest possible
    coverage, tailored specifically for the nature of your
    practice, is to work with an experienced, independent
    insurance broker who specializes in this area.
    I am sure that you won't be surprised to hear me tell you
    that I am just such an insurance broker.
    My firm works with many different insurance carriers,
    all "A" rated or better by the A.M. Best Co., and all of
    whom are actively seeking to write lawyers' professional
    liability. Of course, some of these carriers would like
    you to believe that they are the "best." While it is true
    that some are better than others, the fact is that there
    simply is no one insurer that stands alone the one
    is "best" for your firm may not be the same one that
    is "best" for the firm down the hall or across town.
    Primary LPL limits are available from as little as
    $100,000, to as much as $50 Million. Excess coverage can
    also be obtained to limits of $100 Million, or more.
    Deductibles or self-insured retentions range from as
    little as $1,000 for a solo practitioner, to as much as
    $100,000 for a good-size, financially sound firm. Some
    very large firms carry retentions of as much as $1
    Million, which allows them greater flexibility in dealing
    with relatively small matters without involving their
    insurer, while protecting the firm and its members from
    catastrophic claims.
    Generally, small to midsize firms will most often have a
    deductible of between $2,500-$50,000, and policies vary in
    terms of whether claims costs are charged against the
    deductible. For instance, a common scenario might be for a
    firm to take a $10,000 deductible, but have it apply only
    to actual damages. Claims expenses would be covered on
    a "first dollar" basis. Some firms prefer the simplicity
    of one deductible amount, applicable to both claims and
    damages.
    Other scenarios might be a higher deductible for damages,
    but a lower deductible for claims expenses. Or, maybe what
    is referred to as a "50/50" retention, meaning that only
    50% of the deductible amount will apply to claims
    expenses.
    Even more important is the question of whether claims
    expenses are including within the limits of liability or
    whether they are payable in addition to the limits of
    liability. Even when claims expenses are payable outside
    the limits of liability, some carriers the provide a
    specific, separate limit for defense (usually equal to the
    limit for damages), while some carriers are silent on the
    issue, which theoretically, at least means that claims
    expenses are unlimited. Obviously, before a carrier spends
    $1 Million dollars to defend on a policy with limits of,
    say, $250,000, someone is going to have some very serious
    settlement negotiations.
    Another important - and frequently misunderstood coverage
    issue is that of how to handle "lateral hires." Many
    insurance carriers will customarily cover the attorney
    from the date of hire, on the assumption that the former
    firm's policy will respond to claims arising from the time
    that the attorney was employed by or a member of that
    firm. Under certain circumstances, however, this can
    create a potential gap in coverage. It is very important,
    therefore, that a law firm speaks with a knowledgeable
    insurance professional when hiring new associates or
    partners.
    All of these issues will have an impact upon cost of your
    insurance, though you should keep in mind that there are
    no "right" or "wrong" choices. It really depends upon what
    sort of coverage your firm wants, needs, and is
    comfortable with.
    Probably the key advantage that my firm offers our
    clients, is the fact that as independent insurance agents
    and brokers, we are not committed to "selling" the
    products or programs offered by only a single insurance
    company.
    In many states, counties and cities, bar
    association "endorsed" insurance programs are aggressively
    marketed. While there is nothing inherently bad about
    these programs, many attorneys make the mistake of
    assuming that their bar association's program is either
    the "best" or the least expensive insurance available to
    them. Not necessarily so!
    Programs such as these are generally "slot underwritten",
    which means that the underwriter's flexibility is limited,
    since each policy must be viewed as part of the program as
    a whole, rather than viewed - and priced - entirely on its
    own merits. This can result in the cost of less desirable
    insureds being effectively subsidized by others. While
    this might reduce the cost of insurance for the less
    desirable practice, it might then increase the cost for
    everyone else. In other words, a classic example of
    potential "adverse selection."
    Remember, as well, that a program's endorsement is simply
    a marketing tool - nothing more; nothing less - and is
    often "bought & paid for." While there is nothing illegal
    or unethical about this, remember that some bar
    associations receive a fee for their "endorsement" in
    amounts of $1,000,000 or more per year from the program's
    underwriter. It certainly doesn't take a rocket scientist
    to figure out where all this money is really coming from.
    Can you say, "higher insurance premiums?" My suggestion
    is that if you wish to make a contribution to your Bar
    Association, by all means do so - but don't do it by
    paying inflated insurance premiums!
    If the focus of your practice tends to be in areas of
    high-liability potential, such as IPO's, financial
    institutions, securities, patent, intellectual property,
    plaintiff's personal injury (by the way, did you know that
    plaintiff's P.I. is the #1 practice area in terms of
    malpractice claims?), etc., we know which underwriters and
    which carriers to speak with. I won't waste your time or
    mine!
    If your firm's practice is focused in areas known to be
    relatively low in potential liability, such as criminal
    defense, well there are other underwriters and other
    insurers that prefer this type of risk, and are willing to
    price their products accordingly.
    Indeed, still other carriers are most comfortable
    insuring firms with broad-based, general practices. Some
    carriers love smaller firms, some don't. Some carriers are
    extremely competitive with firms of 25 or more attorneys,
    while some carriers get nervous beyond this point. Indeed
    there are carriers who really don't "shine" unless they
    are dealing with the larger firm of 50, 100, or even 500
    or more attorneys.
    Maybe your firm is going through a period of tremendous
    growth; maybe you're opening branch offices in other
    cities, other states or other countries. Maybe you're
    considering a merger, or maybe you've just dissolved a
    partnership. Some underwriters get really, really nervous
    about changes; others take things in stride.
    Any significant change in your firm should also be a
    signal that it's time to speak with your insurance
    professional to be sure that your coverage keeps up with
    your practice. It may not mean that changes are needed,
    but it is better to ask and be sure, than to discover an
    unintended gap in coverage after a claim is made.
    Associates, of counsels, independent contractors, part-
    time government contracts (such as a municipal
    prosecutor), retired or semi-retired partners . . . all of
    these issues can have an impact on how best to insure your
    practice. Your firm's insurance broker should be fully
    prepared to advise you.
    Maybe you've experienced some significant claims
    problems, or maybe a disciplinary problem - and your
    premium has skyrocketed, or your carrier has dropped you
    altogether. Relax - I know which underwriters are
    particularly adept at dealing with "impaired risk"
    situations.
    The bottom line is that a "one-size-fits-all" approach to
    lawyers' professional liability insurance is simply
    unacceptable in today's dynamic and rapidly changing
    environment. Purchasing coverage for your firm should not
    be treated as an afterthought. Would you rather be doing
    something else? I'm sure that you would. I respect my
    clients' time, and I will never waste it.
    I have split this category into three subsections,
    depending upon the size of your firm. Click here for
    solo's to 4 attorneys, 5 to 25 attorneys, or 25 or more
    attorneys.
    Give me a call at, 877-320-4061, to discuss your firm's
    specific needs. All inquiries are held in the strictest
    confidence, and if it turns out that your best move is to
    keep the coverage you have, I will tell you so. You can
    send me an e-mail at insurance@professional-liability.com.
    I look forward to speaking with you soon.

    Lawyers, Attorneys Professional Liability & Malpractice Insurance




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