Lawyers often want the “best deal” in purchasing malpractice insurance. However, the best deal isn’t always going provide proper coverage for firms. Once a lawyer has decided upon a carrier, there are steps they can take to ensure they receive the best possible rate by taking a few steps before submitting the application. This is because, through the underwriting process, insurance companies look to apply all possible credits and no unnecessary debits when considering the application.
The Role of the Underwriters
There are several important “viewpoint” issues an attorney applying for malpractice insurance should keep in mind. First, the underwriter is not reviewing the application to see if she wants to hire the attorney, but rather to determine the potential malpractice risk of the lawyer applying. The underwriter already knows that most malpractice claims are made against successful, accomplished attorneys who have practiced for many years before having a claim. A lawyer who tries to assuage an underwriter’s concerns with the lawyer’s lack of risk avoidance processes by asserting it has been “done this way” for the lawyer’s entire career and “there has never been a problem” only invites the underwriter to conclude they are looking at the application of one lucky lawyer.
Second, the underwriter, like the lawyer applying for malpractice insurance, is a professional and is well-trained in her craft. The underwriter takes seriously her job of properly rating the potential insured. It is only with the information supplied by the applicant, in combination with her training and experience, that the proper rating can be achieved. The more that the lawyer can help the underwriter understand the lawyer’s practice from the perspective of the firm’s legal malpractice risk potential, the better the result will be for the lawyer from the underwriting process.
Getting Down to Business
A lawyer should review the entire application before beginning to fill in responses. Doing so will help the lawyer see what kind of “picture” the application will ultimately paint of her and her law firm. If the lawyer has submitted previous applications, these should be reviewed before starting on the current one. If there is information that will need to be gathered for an answer, the review can identify that so it can be readily compiled in a timely fashion, rather than doing so in a rush just in order to get “something” on the application to keep the processing moving along.
Regarding the application itself, the lawyer should complete all questions. It may not be readily apparent to the lawyer why the question is pertinent to the underwriter’s task, but unanswered questions slow down the process, and often require follow-up inquiries to the lawyer. At worst, unanswered questions may leave an underwriter little discretion in how to rate the application.
The lawyer’s answers should be legible and unambiguous. Like the unanswered question, undecipherable handwriting and cryptic responses merely slow down the process and prevent the underwriter from being able to responsibly evaluate the application.
To the best of the lawyer’s ability, date ranges should be specific. For example, when requested to provide information regarding prior coverage, the lawyer should respond with “month/day/year” to “month/day/year”, not simply “month/year” to “month/year” so to enable the underwriter to eliminate concerns over possible lapses or gaps in coverage from her evaluation.
Regarding basic risk management, the underwriter knows there are some tools every law firm should implement, such as calendaring and docket control procedures, the use of engagement, non-engagement and closing letters, and conflicts of interest procedures. These tools and/or procedures help mitigate the risk of a claim if used properly. A lawyer who can make the law firm’s processes understandable to the underwriter allows the underwriter to rate the lawyer more highly. But when an underwriter reviews an application that makes it appear that the lawyer and law firm do not take the use of these malpractice avoidance tools seriously, the underwriter will be concerned.
From a malpractice risk perspective, the more frequently and consistently these tools are used by the firm, the better the firm looks to the underwriter. For example, regarding a firm’s conflicts of interest checking system, the application should state:
- The law firm checks prospective clients for conflicts of interest prior to the initial intake meeting, at the conclusion of that meeting, and as an ongoing process when new parties, witnesses or experts enter the case, and
- That process includes a check of the prospective client’s name against a data base of all current, former and declined clients, and
- Includes as well a review and approval by all firm attorneys of the prospective client and the anticipated matters and issues of the representation, the underwriter can tell the firm takes seriously its responsibility to avoid conflicts.
However, when the applying lawyer responds to the conflicts of interest inquiry by stating that because of the type of law she practices, and/or the type of clients she represents, the attorney does not have conflicts of interests issues, the underwriter will question how well the attorney understands conflicts of interests issues generally, and how seriously the attorney is about discovering them and dealing with them appropriately.
Beyond the Basics
Depending on the type of practice a lawyer has, additional issues can arise in the application and underwriting processes. A typical example is lawyers who work in an office-sharing arrangement. It is not uncommon for office-sharing lawyers to hold themselves out in such a way as to potentially confuse clients as to the nature of the office arrangement. If office-sharing lawyers look like a “firm” to potential clients, it is possible for the malpractice liability of one of them to be imputed to the group. To avoid this, office-sharing lawyers should take steps to avoid any such possible confusion. Signage, advertising, internal procedures, fee agreements and engagement letters, phone answering responses, etc., should be done in a manner that indicates the client is retaining the services of only one of the group.
Typically, the underwriter will first become aware of such a potential issue in the review of the applying lawyer’s letterhead. If the application states coverage is being requested for only one attorney, but multiple attorneys are listed on the letterhead, the underwriter may not be able to rate the application solely for that one attorney.
The application may inquire about the lawyer’s web presence, asking for the firm’s website address. Although websites are ordinarily considered by law firms as informational or client-generating tools, they also provide underwriters with a wealth of information. The underwriter will look for consistency between the application and the website, particularly in the areas of practice listed, the firm’s corporate status (e.g. partnership, LLP, LLC), and the number of attorneys. Discrepancies will need to be resolved. Especially troubling for the underwriter are websites that list practice areas not listed in the application. Is the law firm “dabbling” in areas outside its expertise?
Dealing with Past Issues
While much of the information requested in the application is general in nature, some questions do touch on issues very personal to the lawyer, most particularly those requesting explanations of prior malpractice claims or disciplinary complaints. Although this portion of the application may be a reminder of an unpleasant interlude in the lawyer’s career, it is important to address such matters forthrightly. Perhaps the most important issue for the lawyer to address in such a situation is the steps taken by the lawyer to address and resolve the cause of the previous problem so the underwriter can feel assured it will not reoccur.
The Bar Plan’s Underwriters
The Bar Plan’s underwriting staff has more than 60 years of combined experience with Lawyers’ Professional Liability insurance. Our commitment to risk management helps attorneys minimize potential liability through our practice management program, risk management hotline, CLE workshops and other bar-related educational programs. The Bar Plan stands apart from the competition in that:
- We have more significant and continuous experience writing lawyers’ professional liability in Missouri than any competing carrier.
- Our rates are based on market experience and not market opportunity.
- Our products and services are for the sole benefit of our local legal communities.
- The Bar Plan sponsors and supports the local legal community.
- We are the only legal malpractice carrier endorsed by The Missouri Bar and the Tennessee Bar Association.
- We utilize skilled local defense counsel to defend your claim. All of our claims adjusters are attorneys.
- Many of our Board of Directors are experienced attorneys.