Posts Tagged ‘Professional liability insurance attorney’

What Are They Asking?

September 12, 2012

Kelan J. Vorbach, CIC

This question came in from a firm administrator, “On the Real Estate Practice Supplement, when they ask for the average value on real estate transactions, do they mean  the value of homes bought & sold or value of fees that we charged for the closing we handled?”

The insurance company wants the value of the property. Professional claims in the Real Estate Area of Practice generally relate to the value of the property in question. Real Estate attorneys in areas with substantially higher home values (Alpine, NJ, Sagaponack, NY, Greenwich, CT and so forth) represent a higher risk to the insurance company.

For more information or to ask a question of your own, contact me at www.LawFirmInsuranceExpert.com.

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Now What Do We Do?

April 5, 2012

Kelan J. Vorbach, CIC
Professional Liability
Program Manger,
John B. Wright Insurance

This call came in from the office manager. The partners wanted to ignore the issue but the office manager thought I might be able to help.
The problem was a new hire. It was a key non-professional role in their busy office. The first time they thought it was a fluke. One day, the new employee didn’t show up and didn’t call in. When the employee arrived the next day, the explanation given was personal reasons. Management reviewed the policy on calling in with the new employee and assumed that was the end of it.
A few weeks later it happened again, no phone call and the employee was unreachable by phone. The firm left messages. The new employee responded by text message, again citing personal reasons but this time claiming he felt intimidated by one of the partners. The intimidation claim concerned the partners enough that they were just going to let it go and not do anything. Fortunately the firm had an Employment Practices Liability Insurance (EPLI) policy. In addition to covering employee claims of discrimination and harassment (including sexual harassment) the EPLI policy provides management tools and a toll free help line. A single call to the help line solved the problem. The firm was connected to an experienced employment law attorney who reviewed the facts of the case, including information regarding age, health, gender, orientation and ethnicity. By the time they completed that call they had the confidence to immediately fire the bad employee, knowing there was no reasonable basis for a claim.
While EPLI is an insurance product designed to pay employment practices claims and defense costs, the toll free confidential support is the most frequently used policy feature. The carrier benefits by assisting the firm in claim avoidance and risk reduction. The firm benefits from the management support they receive.
As a class, insurance carriers consider law firms a fairly high risk for EPLI claims. Therefore EPLI coverage for law firms is generally available only as a stand alone policy or as part of a management liability policy. If your firm does not carry Employment Practices Liability Insurance, I urge you to consider it. For more information contact your agent or give me a call.

Kelan J. Vorbach, CIC is the Professional Liability Program Manager with John B. Wright Insurance. You can check him out at http://www.LawFirmInsuranceExpert.com. For a consultation call 732-223-6611 ext. 108.

Choose Carefully

March 30, 2012

Kelan J. Vorbach, CIC
Professional Liability
Program Manger,
John B. Wright Insurance

In my blog I like to address real issues from real law firms. Usually it’s something positive. Today it is a cautionary tale. I got a call this week from a firm that had a problem with their agent and wanted to change agents right away. When a call starts like that, nothing that follows is good.
The firm is well managed; but, their back office routine broke down when a key individual had to care for a sick relative. The firm failed to pay their renewal premium and their professional liability policy lapsed. The consequences of a gap in coverage on a professional liability policy are severe. While replacement policies are available; as a rule, when there has been a lapse in coverage, underwriters will not offer prior acts coverage. In other words, they will not cover legal services performed prior to the effective date of the new policy.
The old policy gave them 60 days from the termination of coverage to purchase an extended reporting endorsement. For about $5,500 per attorney they could purchase the right to report new claims for all services provided from the founding of the firm (back in the 80s) through the last date of coverage when the policy failed to renew. New services would be covered by the new policy. Although the firm discovered the lapse in coverage in time to buy the extended reporting endorsement, their agent told them they didn’t need it. He said the new policy would cover prior acts.
Recently a claim came in for work the firm did years ago. The insurer denied the claim because the services were performed prior to the new coverage. The firm realized too late that they had gotten bad advice. The moral of the story is that advice you receive from the agent providing your professional liability insurance can have serious consequences. Choosing an agent based on a family relationship, connection to a particular partner or other affiliation can be a big mistake. Any agent can go to a wholesaler and get you a professional liability policy. That doesn’t mean they have the experience to give you good advice. Ask tough questions. Ask if they insure other law firms and if they will let you talk to them. Be careful who you choose to handle your professional liability insurance.
Each carrier’s policy contains different language and endorsements to change the policy language may be available. For specifics on how your policy handles prior acts coverage call your agent or contact me for a consultation.
Kelan J. Vorbach, CIC is the Professional Liability Program Manager with John B. Wright Insurance. You can check him out at http://www.LawFirmInsuranceExpert.com. For a consultation call 732-223-6611 ext. 108.

We Plan to Hire an Independent Contractor. Does Our Policy Cover Her?

January 10, 2012

Kelan J. Vorbach, CIC

The the question that is the title of this post may not be the right question. Does the firm want to be covered for the independent contractor’s wrongful acts or does the firm want to cover the independent contractor?  

Normally, the firm is covered for professional claims regardless of who performs the services.  Current and former owners, partners, employed lawyers and of counsel attorneys are similarly covered for work done on behalf of the firm.  The carrier will defend both the firm and the individuals.

Independent contractors are generally treated less favorably. Though the carrier will respond to claims against the firm based on the services the independent contractor performed on behalf of the firm, they may not respond to claims made against the independent contractor for those same services. Further the carrier may try to shift all responsibility to the independent contractor if both the firm and the independent contractor are sued.    

Of course, each carrier’s policy contains different language and endorsements to change the policy language may be available. For specifics on how your treats independent contractors call your agent.

Kelan J. Vorbach, CIC is the Professional Liability Program Manager with John B. Wright Insurance. You can check him out at www.LawFirmInsuranceExpert.com. For a consultation call 732-223-6611 ext. 108.

Why Do Bad Things Happen to Good Attorneys?

November 21, 2011

Kelan J. Vorbach, CIC

About 90% of professional liability claims against lawyers end up closing without any payment of damages. Defending groundless claims is expensive, a hassle and a waste of time. While there is no magic way to prevent groundless claims there are some things you can do to reduce your risk.

  • Client Communication – Clients who are kept informed are more inclined to like you and feel you care about them. Clients that have those feelings are far less likely to sue you.
  • Client Selection – Trust your gut if you have a bad feeling about a potential client in the initial consultation. It is surprisingly common for lawyers with claims to tell me how they ignored warning signs and accepted clients against their better judgment.
  • Conflict of Interest – Do the conflict check before you agree to represent the client and be extremely careful about acting in dual capacity, even with a waiver. Just because you have signed conflict waivers doesn’t mean you won’t have a claim. 
  • Control Expectations – If you keep the client in the real world from the beginning they are far more likely to understand and accept the outcome.
  • Define the Scope – Whether you use engagement letters or retainer agreements define the scope of services and the terms of the attorney – client relationship. True story, aNew Jerseyreal estate firm successfully closed a deal on a commercial property after another firm failed to do so. The client then sued for failure to advise them they might have malpractice claim against the first firm. An engagement letter limiting the services to doing the closing could have saved big money. 
  • Declination Letters – If someone is a bad potential client they may be even worse if they come back long after the initial consultation claiming you said you would take care of everything. Use declination / statute letters when you’re not going to take a case. 
  • Calendar Management – Whenever possible use redundant systems with two different people making entries. Then cross check them regularly to be sure noting was missed.
  • Timely Payment – Collect sufficient retainers and send regular monthly invoices. This helps the client understand the costs and helps prevent having to sue for your fee. Fee suits often result in counter-claims for malpractice. 

The items above are not a comprehensive risk management plan, its just food for thought.   If you would like to discuss or if you have any questions related to insurance for a law firm, give me a call at 732-223-6611. 

Kelan J. Vorbach, CIC is the Professional Liability Program Manager with John B. Wright Insurance. You can check him out at www.LawFirmInsuranceExpert.com.

How does a new practice area affect professional liability?

October 17, 2011

Kelan J. Vorbach, CIC

A client sent me a great question,

 “If I handle a divorce and family law wasn’t specified on my malpractice application, do I need to to inform my carrier?”

You don’t have to tell your carrier immediately but you should talk to a professional liability specialist before venturing into any new area.  Most policies cover without limitation to the areas indicated on the application (assuming you disclosed all areas that applied at the time of the application). New areas must be disclosed on renewal.

 However, some areas dramatically increase your price for years, even if you only perform a one time service. Since it is better to know what you are getting into you should consult with an agent versed in professional liability before you are committed. A general practice firm that dabbles in a high risk area can spend more in premiums than they made in fees. 

If you have a question write me or call 732-223-6611.

www.LawFirmInsuranceExpert.com

How do you reduce the risk of a new hire creating professional liability problems for your firm?

October 12, 2011

Kelan J. Vorbach, CIC

It is critical to vet the attorney before hiring. A great tool to do this is a New Lawyer Supplement form that you can get from your professional liability carrier. These forms ask probing questions about claims and circumstances involving the individual attorney. While the carrier may not require the form until renewal time it is better for the firm to know BEFORE hiring.

You should be careful about files the new attorney is bringing from the old firm. These can be a source of claims so ask questions and be prepared to probe deeper.

Once you’ve made the hire, train and observe to make sure the new attorney complies with your firm’s standards and procedures. Their last firm may have had different controls and their routines may not fit with your system.

To learn more about this or any other lawyers’ professional liability question, or to get a second opinion on your policy, please call me at 732-223-6611 ext. 108.