Buyers need to shop carefully and look beyond bottom line price to see what they are buying. Unfortunately, a sizable % of buyers are not buying because they think they might need to use the policy, but rather they are buying to satisfy some outside requirement that they have the insurance in place. The outside requirement might be a contract for services they are signing that requires them to carry the insurance or it might be a requirement by a court to have it to for one reason or another.

We find that buyers need to be convinced they might need the product before they will look deeper into product analysis. Perhaps a sobering statistic from the ABA’s standing committee on professional liability might help buyers look beyond price: Over half of all claims arrive unannounced, unexpected and with a genuine “out of the blue” surprise factor.

That means buyers who acquire the insurance with no expectation that a claim will be made against them need to “see the light” and examine the product more carefully. How prevalent are claims? On average, each attorney will have one claim for every 10 years of practice. That includes all those that thought they would never have one.

We here at Mainstreet are in agreement that allegations of professional negligence against lawyers are increasing. In addition to the “conflict of interest” problem, we see an overall increase in the “expectation of favorable results” and are advising our clients that lawyers need to be especially mindful at time of client engagement to carefully document both the limitations in the scope of representation, AND specific results are never guaranteed.

During these particularly difficult financial times, stressed clients are expecting relief in one form or another and if it is not forthcoming thru legal representation, are quick to look for an alternative responsible party, i.e. their attorney. Forewarned is forearmed.

Oregon was then and still remains the only state that makes the participation in their state insurance plan mandatory. The effect of this requirement has been to preclude the open market commodity of primary insurance for Oregon lawyers. Whether this is a good idea or a bad one depends on your perspective concerning open markets and credible arguments exist on both sides of the issue.

We here at Mainstreet Legal Malpractice Insurance receive a regular flow of questions from lawyers located in Oregon that are going to be doing some legal work outside of Oregon (usually in Washington). And of course, we field questions from Washington licensed lawyers who will be doing a bit of work in OR. Washington lawyers want to know if their professional insurance will provide coverage for work they do in OR. We always caution that we can speak to how the policy would respond but we do not provide any advice concerning the licensing requirements here or there, and speak only to the insurance contract issue. Just about every professional policy commercially available to lawyers has a territory clause. Here is the clause from a typical policy:

1. TERRITORY

This policy applies to professional services occurring anywhere in the world. However, the claim must be made and the suit must be brought within the United States of America and its territories or Canada. So your professional insurance acquired from one of the regular free market providers will indeed cover you for work you do might do outside Washington as long as the claim or suit is brought within the United States, its territories or Canada. Then the question becomes will the policy provided to Oregon based attorneys by PLF provide coverage for work Oregon attorneys to outside of Oregon? Since we are not agents for or in anyway connected with the PLF we must refer that question to PLF representatives for a proper response.

My least favorite is, “I don’t need this insurance. I am competent and keep my clients happy and will never have a claim, but I have a contract now that requires I carry it.” Why is it my “least favorite”? I guess I have learned over the last 40 years that an illusion of invincibility generally precedes the surprise of fallibility. We all make mistakes. Perhaps a first mistake is assuming we operate outside this basic law of physics.

My favorite reason is, “If I make a mistake, I want to be able to offer restitution to my client”. You would think I would hear that often and continually. Alas, it’s not so. Most reasons are a tad more self-centered. But maybe the desire to do right by a client is self centered as well?

But good or bad, by acquiring professional insurance for your private practice of law you are joining the fraternity of professionals that choose responsibility over rolling the dice.

This first post will help you understand whether part-time attorneys can get professional liability insurance. The answer is often yes, but there are some exceptions.

Actuaries. Like any other type of insurance, legal malpractice insurance rates are determined by piles and piles of statistics. Legal malpractice actuaries periodically review the claim statistics and file rate changes to reflect the latest data. These rates are filed with each state’s Department of Insurance and are considered public record. If pouring through reams of statistics sounds like a great time to you, ask your state Department of Insurance to send them to you and you can take a look. (You will have to specify the particular company and line of insurance - Lawyer Professional Liability, LPL - when you make your request.) Fair warning, though – rate filing is a rather abstruse art form that has developed through years of interaction between rate filers and regulators. You might find better ways to spend a Saturday.

Rates are usually filed on a “base” rate of 100/300 ($100,000 per claim, $300,000 annual aggregate). A separate factor is then filed to determine rates for increasing limits above the base rate. This means that the rates for the higher limits can be changed independently of the base rate. So, a rate hike in the “increased limits factors” could in theory impact only those with coverage limits above $100,000, and leave prices for those with only base coverage untouched.

Base rates and increased limits factors vary greatly from company to company, making it extremely difficult to compare prices between companies. That’s why it’s important to find a knowledgeable legal malpractice insurance professional to make sure you’re comparing apples to apples.

If it’s time to review your legal malpractice insurance policy, call one of our knowledgeable Mainstreet Legal Malpractice Insurance agents. We’ll do the legwork for you to make sure you’re not paying more than you need to.