Author Archives: INF_WP_U53r

Early Reporting of Claims and Potential Claims

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Many of our risk management video tips are surrounding the need for early reporting of claims and potential claims. A very important risk management tip. In this same vein, I want to talk about the angry client. 

Many insureds have had this situation where a client unexpectedly shows up at the office, or calls you on the phone to express their displeasure about something you did or something that has happened. 

Perhaps their case is taking too long. They haven’t heard from you in a few weeks, their phone call wasn’t returned, or they’re just not feeling the love from your office. Don’t just shrug this off as that’s just Joe being Joe, or they just want to blow off steam, or you convince yourself that nothing you did was wrong or incorrect and it’ll blow over. 

Unfortunately, many insureds take this approach and find themselves embroiled in a legal malpractice suit down the road. As with any claim or potential claim, report the issue, let the carrier know about it and let them decide if it meets the definition of a claim or potential claim. And if you don’t report it, at least call the malpractice hotline that may be available to you from your carrier. Most insurance carriers do provide a hotline for this type of situation and you would be well advised to use it. It is part of the benefits program of being an insured.

Don’t be the cautionary tale of an unhappy client.

Legal Malpractice Avoidance Tips – Don’t Go Into Business With Your Client

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Conflicts of interest have always been a concern to underwriters of legal malpractice insurance. Conflicts come in different shapes and sizes and can oftentimes be difficult to identify. Most attorneys won’t represent both parties in an auto accident or the husband and wife in a divorce matter, but sometimes are quick to jump into a business venture with a client. I don’t know why, but it seems to me that recently, attorneys are more willing to overlook or downplay the serious nature of getting into business with a client. 

Whether you want to invest in the client’s business or take an active role in operating the clients business, both are fraught with legal malpractice dangers. Usually, in the end, it’s just not worth the risk or the friendship to be in business with a client. Now, I can’t tell you not to go into business with a client, but I can tell you that if you do decide to do it, make sure you are well aware of the dangers of doing so and review and dissect all of the pros and cons. 

Review the insurance policy; how does this affect the insurance coverage? Talk to your insurance broker and other professionals such as your accountant and business consultant and call the legal malpractice hotline of your insurance company. You can discuss the situation with a legal malpractice attorney. This benefit is usually included in the policy for insureds of most insurance companies. Find out all the insurance information good and bad before jumping into business with a client.

Legal Malpractice Avoidance Tips – You Must Stay Current With Technology

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Staying current with technology is included in comment eight of 1.1 competence rule. In other words, everyone, I think, is familiar with the 1.1 competence rule of professional conduct that says a lawyer shall provide competent representation to the client. Commenting to that rule 1.1 says to maintain the relevant knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including benefits and risks associated with relevant technology. 

A lot of the issues that come up today that I see are either lawyers’ use of technology as far as utilizing Facebook, Twitter and things like that in their own practice, as well as advising a client as to their use of technology. And there is a pretty good ethics PBA opinion that describes the lawyer’s role with regard to technology and the lawyer’s role in the use of technology on behalf of the lawyer and also representing the client and advising the client on the use of technology.

Meet Scott Eberle

Scott Eberle is on several insurance carriers defense panels. He’s been doing this type of work for many years. In my opinion, he’s one of the best presenters of legal malpractice and how to prevent it. So I think you’re in for a treat in terms of taking back some good information that you can implement in your firms.

Scott Eberle Attorney

“My name is Scott Eberle, I am an attorney at Burns White in Pittsburgh where my practice focuses on representation of professionals, lawsuits and ethics matters. I’m focused on representation of lawyers in legal malpractice lawsuits, as well as ethics issues either in front of the office of disciplinary Council, or just general ethics consultation. I help attorneys navigate the issues that come up in their practice and I’m able to provide guidance on what you need to do to follow the rules of professional conduct to not get yourself in potential trouble with the disciplinary council.”

Legal Malpractice Avoidance Tips – Use Countersigned Engagement Letters

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Scott Eberle is on several insurance carriers defense panels. He’s been doing this type of work for many years. In my opinion, he’s one of the best presenters of legal malpractice and how to prevent it. So I think you’re in for a treat in terms of taking back some good information that you can implement in your firms.

Meet Scott Eberle

“My name is Scott Eberle, I am an attorney at Burns White in Pittsburgh where my practice focuses on representation of professionals, lawsuits and ethics matters. I’m focused on representation of lawyers in legal malpractice lawsuits, as well as ethics issues either in front of the office of disciplinary Council, or just general ethics consultation. I help attorneys navigate the issues that come up in their practice and I’m able to provide guidance on what you need to do to follow the rules of professional conduct to not get yourself in potential trouble with the disciplinary council.”

The technique of adding a signature to a previously signed document is known as countersigning. The agreement between two or more parties is approved by the countersignature. By having a client countersign documents, you have proof that the client received it and they read it.

Just remember, you must look at the engagement letter as a contract between you and the client. It’s a contract that basically says what you’re going to do, and how you’re going to do it. If you must approach that every time, there are some good samples out there that you can get on the internet. Those are great, I think, but I do caution you, I think the best way to effectively utilize an engagement letter is to customize it every time. Because if you’re not customizing the letter, you’re missing out on an opportunity to really limit your potential liability down the road if anything should ever come up.

What Is Directors And Officers Liability Insurance?

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A common practice amongst professionals, especially attorneys, is the acceptance of board positions on for-profit and not-for-profit entities. And although most of the time the decision to accept these positions is done with all good intentions, it doesn’t mean that there is no exposure related to the acceptance of those positions. 

If you’re an attorney, or if you’re any professional, and you’re sitting on a board now or you’re contemplating the acceptance of a board position, I think there’s a couple of things you need to do. 

First off, you need to go to that organization and ask them if they have a separate directors and officers policy. If they do, great! Ask them for a copy of that. That way, you can put it in your file, and you’ll know you know the limits that they have to cover you, the deductible if there is any deductible and it’s applicable to you and the policy period so you know when it expires, and when it needs to be renewed. 

If the organization comes back to you and says no, that they don’t have a separate D&O policy, I think you need to ask them if they would consider or have they ever considered purchasing a D&O policy. And this is not just for you, the person asking the question. You’re asking for all of the other directors and officers, the employees of the organization, and even sometimes the volunteers of that organization. It’s something that they really need to consider and look at. Secondly, you need to contact your legal malpractice insurance company. 

Now, how does accepting a board position affect your coverage? Most policies actually exclude your acts as an officer or director of an outside organization. There is also an ownership interest in most policies that state that if you have any type of ownership, or even if you just own, manage or control an outside entity, your professional services that you provide to them are excluded under the policy. 

So there are definitely exposures that can and do arise when you accept a position on a board, be it not-for-profit or for-profit. 

My comments are not intended to stop you from accepting any position on any board. My comments here are merely to ask you to take a step back before you accept, ask a couple questions, and make sure you know the exposure that you’re accepting by accepting the board position.

Term Life Insurance vs. Whole Life Insurance

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Labor Day is upon us, which means it’s the month of September, which brings us back to the fact that September is Life Insurance Awareness Month. You know, when most people think about life insurance, they’re usually thinking about two different types of policy – either a term life policy, or a whole life insurance policy. Do you know the difference?

Term Life Insurance

My opinion is pretty straightforward and pretty cut and dry. Term Life insurance is just that – it’s only life insurance. You purchase the policy for a certain amount of time, and you have the life insurance for the length of that term, or that amount of time.

Most people consider a term life policy when they’re buying a house. Let’s say you buy a house for about $300,000; you have a 30-year mortgage on it, you then go out and you buy a 30-year term life policy for $300,000. In the unfortunate event that you perish during that term, the $300,000 is paid out, and that goes to pay off the mortgage on the house. There is no cash value at the end of the 30 years.

If you’re fortunate enough to live a long life and you live past that 30-year term, the insurance just ends, and you walk away from the contract.

Whole Life Insurance

Whole Life insurance is a little bit different. Whole life insurance does have a savings component associated with it. Therefore, every time that you pay your premium, a certain amount of that premium will go to pay for the life insurance and a certain amount of that premium will go into an investment vehicle.

At some point during the term of that whole life policy, you’ll start to build up a little bit of a nest egg or a value or sum that you’re able to withdraw from. Some of them allow you to even take a loan against it. Again, in the unfortunate event that you do pass during the term of whole life insurance policy, the life insurance proceeds are in fact paid out.

But again, if you do live that long and happy life, and you live past the term of that whole life insurance policy, you will in fact have a nest egg that you can withdraw or take a loan from and spend any way that you want to.

One thing to keep in mind is that term life insurance policies are usually less expensive than a whole life policy. I hope this little bit of information helps you decide which type of life insurance is best for you.

Life Insurance Awareness Month Is Approaching

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It’s hard to believe it’s mid-August already. Pretty soon it’ll be September and fall will be here. Speaking of September, I want you to keep in mind that September is life insurance Awareness Month. It gives us all a good chance to sit back and review the changes that have occurred over the past year, and how those changes affect our life insurance coverage.

If you bought a new house, sold a house, had a new baby, maybe your oldest child went to college, or there’s several other situations that could impact the life insurance coverage, but certainly those ones just mentioned really do impact your need for life insurance.

Take a couple of minutes during the month of September and review your situation. If you have any questions with regards to life insurance, give me Don Ivol a call at 412-563-2106. I’ll be happy to review it with you.

In the meantime, don’t forget, take a couple of seconds and enjoy the last couple of weeks of summer. Whether you go golfing, go on vacation, or visit one of our lakes in Pennsylvania like I am. Everybody deserves to enjoy a couple weeks of rest and relaxation.

What Is A Step Rating?

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The most common question I get as an insurance broker from new lawyers or new law firms is why did my premium on my professional liability insurance increase especially when we haven’t had any change at all in our areas of practice? And probably more important, we haven’t had any claims, but yet my premium goes up by 20%? What’s the deal? How did that happen? 

Well, the simple answer to that question is, step rating.  Step rating is really nothing more than the carrier’s attempt to price your increased exposure as you practice year to year. 

As an example, the very first year that you, the lawyer, purchase a professional liability policy is probably going to be the least amount that you ever pay for professional liability insurance. The reason for that? You have no baggage, the carrier is basically covering you from the effective date of your policy, day one, going forward, there’s nothing in your past that actually is going to impact the premium, or gives the carrier concern that there might be a claim out there waiting to happen. 

Your first renewal, the carrier not only is going to price it for everything that you’ve done in the past, you know, which is one year, however, they also have to price it for what you’re going to do for the next 12 months. Therefore, their exposure basically doubles. Therefore, they have to increase your premium to capture that risk. 

The same holds true for the third year, not only is the carrier going to insure you for everything that you’re going to do for the third year, but they’re also insuring you for everything that you did in year two and year one. Basically, their exposure is tripling – they have to capture that risk by again, increasing your premium. 

The good news behind step rating is that there is a cap to it. It’s not going to increase your premium for the next 30, 40 years. Depending on the carrier, step rating could cap at five years, could cap at six years, could cap at seven years. Again, it depends on the carrier that you’re insured with. But again, the good news is that it does cap, it doesn’t continue on and on and on. 

What Is A Hammer Clause?

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What is a hammer clause

If you have a legal malpractice policy or have been looking for one, I’m sure you have heard the term “Hammer Clause:”.  It has been and is a widely discussed term. Well what is a hammer clause anyway? Great question!

Simply put, the hammer clause which is located in the consent to settle provision of the policy is the carrier’s ability or attempt to force you to settle a reported claim.  In its strictest form, you, the insured, must accept the negotiated settlement of the carrier.  You have no input. 

Over the years, the consent to settle provision and hammer clause have been revised and modified. Today, some carriers state that they will not settle any claim without the consent of the insured, who’s consent shall not be unreasonably withheld.  What’s unreasonable right?  It is not defined in the policy.  

Other carriers state that you, the insured, can refuse to settle a claim agreed to by both the claimant and the carrier.  However if that claim continues and settles for a higher amount than what was originally agreed to by the carrier and the claimant, you are responsible for the difference! Yiokes, that could be expensive.  

Still there are other types of modified versions of the “clauses.”  These versions allow you to reject a settlement the carrier and claimant agree to. and if that claim settles/closes for a higher amount than the original settlement agreed to, the carrier will agree to pay a certain percentage of the increased settlement.  You will be responsible for the rest.  This is kind of a middle of the road hammer clause.

The best type of consent to settle provision for you, the insured, is to have no hammer clause.  Some, not many carriers do offer this.  They give the insured the absolute right to refuse to settle with no consequence or hammer!

How do you know what you have in your policy?  Best way to find out is to read the policy and discuss it with your broker.

Disciplinary Actions Against You

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Today, a lawyers malpractice insurance policy is usually written with several different types of ancillary coverages included in the policy.  These are benefits that are in addition to the coverage for the actual or alleged act of malpractice.  

One of these benefits found in most policies is coverage for disciplinary proceedings.  Based upon what I have seen, the disciplinary coverage is one of the most beneficial coverages in the ancillary category.  Most policies that offer this type of coverage will have a sublimit available to the insured.  This sublimit of coverage can range anywhere from $10k to $250K, some will offer this in the form of a per proceeding limit with a policy maximum while others will offer the limit as a policy aggregate.  

Also, some carriers will specify that the deductible will apply while others will specify that the deductible does not apply.  A nice feature.  Accessing this type of coverage is similar to reporting a claim, you must report to the carrier as soon as you are aware of the disciplinary action against you.  Late reporting can cause declination of coverage.

Having to appear or to report to the disciplinary board can be nerve racking experience.  If this happens to you make sure you retain counsel to assist you and notify your insurance carrier to report the issue.  Don’t represent yourself, obtain counsel and use your policy coverage to assist with the costs.