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Medicaid Decision by Supreme Court upholding Ahlborn

Posted on May 17, 2013

For law firms practicing tort law, this Supreme Court decision may be of great interest.  In WOS vs. E.M.A., the Supreme Court affirmed the Fourth Circuit’s ruling that North Carolina’s irrebuttable statutory presumption that 1/3 of a tort recovery was the amount due on state’s Medicaid subrogation claim was invalid under Federal Medicaid anti-lien statute and the Court’s 2006 Ahlborn decision.
 
Important language from the opinion includes “The task of dividing a tort settlement is a familiar one. In a variety of settings, state and federal courts are called upon to separate lump-sum settlements or jury awards into categories to satisfy different claims to a portion of the moneys recovered.  What they cannot do is what North Carolina did here:  adopt an arbitrary one-size-fits-all allocation for all cases.”


Carlin Edelman, Broker
Insurance Consulting Services, LLC


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Insurance Carrier Ratings by AM Best

Posted on April 9, 2013

When deciding which malpractice insurance carrier your firm should choose, one factor you might want to consider is the carrier’s AM Best Rating.
 
The AM Best Rating is an evaluation published by AM Best Company of all life, property and casualty insurers domiciled in the United States and U.S. branches of foreign property insurer groups active in the United States.  The ratings are often used to determine the claims paying ability, suitability, service record, and financial stability of the insurance companies.
 
Other rating agencies include Standard & Poor’s, Conning & Company, Fitch, and Moody’s, although in legal malpractice insurance AM Best seems to be the most commonly used.
 
The AM Best Rating for a carrier can be found at AM Best Reports


Carlin Edelman, Broker
Insurance Consulting Services, LLC

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The Basics of Lawyer's Malpractice Insurance

Posted on April 8, 2013

While purchasing malpractice insurance is not the most complex of matters that a lawyer will handle in any given year, it is a specialty line of insurance and different from your car and homeowner's insurance. 

With so much information available on the internet, it is often tough to find good, reliable sources of information that can quickly give you what you need on a topic.  

The Wisconsin Bar posted an article the other day that provides a good, solid and short article on the basics of malpractice insurance AM Best Reports


Thad Balsamo, Senior Broker
Insurance Consulting Services, LLC


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Claims Expenses Inside vs. Outside the Limits

Posted on April 3, 2013


A common question posed by attorneys deals with the issue of Claims Expenses Inside the Limit vs. Claims Expenses Outside the Limit.

Just as the title would imply, policies that come with Claims Expenses Inside the Limits are structured such that the Claims Expenses (the expenses associated with defending a claim) reduce your policy limit of liability by that amount.
For example, if you have a policy with a $1M per claim limit, and you have a claim that costs $250,000 to defend, you would have $750,000 left with which to settle the claim.

Conversely, policies that come with Claims Expenses Outside the Limits are structured such that the Claims Expenses do not come from within the policy limits. That said, if your firm has a policy with a $1M per claim limit and you have a claim, the firm would have the entire $1M available with which to settle the claim.

No two firms are exactly alike, so when making the decision on which type of coverage is best for your firm, some factors to consider are the areas of practice the firm engages in, the complexity of the matters the firm handles, and the overall limits the firm has in place through their policy.

For an easy to read article outlining some additional policy considerations with lawyer's malpractice insurance, scan the ABA article Purchasing Malpractice Insurance

Carlin Edelman, Broker
Insurance Consulting Services, LLC


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Law Firm Disaster Response: Prepare, Plan and Stay Informed for Emergencies

Posted on March 19, 2013
 

Would you or your employees know what to do in the event of a natural or man-made disaster?

Law firms, like any other businesses, can never do too much to prepare for the impact of the many hazards they face in today’s world including natural hazards like floods, hurricanes, tornadoes and earthquakes. Human-caused hazards include accidents, acts of violence by people and acts of terrorism.
 
There are five steps to develop a disaster response plan.

- Program Management
- Planning
- Implementation
- Testing and Exercises
- Program Improvement 

A disaster response plan can be as simple as posting evacuations routes and the names and numbers of the local fire department, after-hours emergency contacts and public works departments such as the water and gas company.
 
Disaster preparedness is another way that law firms can work to ensuring the continuation of business operations and the safety & future of its staff at the same time.
 
For more information or to implement a disaster response plan of your own, please visit
Ready.gov/business

Holly Larkin, Account Manager
Insurance Consulting Services, LLC

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International Debt Problems, Claims Frequency Impact Lawyer Rates

Posted on March 14, 2013


Global concerns that have persisted for the last few years are continuing to impact lawyer’s professional liability insurance rates.

The consensus is that the market may begin to flatten out or even soften in 2015 or 2016.
Experts point to a confluence of factors, including unresolved debt issues in Europe and the US, an uptick in claim frequency against lawyers and continued lingering questions of long term stability with global financial institutions.  

To learn more about the economy and its effect on lawyer’s malpractice insurance premiums
Click Here

By being proactive in working with our clients and perspective clients, ICS has been very successful in mitigating any unnecessary increases and even negotiating premium decreases on lawyer’s malpractice insurance in many cases.

Thad Balsamo, Senior Broker,
Insurance Consulting Services, LLC

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Lawyers Malpractice Insurance and Withdrawing From Representation 

Posted on March 12, 2013
 

Most lawyers will encounter a difficult client and face the need to withdraw representation at some point in their career.  If the client is difficult to the point of being uncooperative, or makes it difficult for you to discharge your duties as an attorney, you likely have “good cause” to withdraw.
 
In terms of malpractice avoidance, a lawyer is well advised to send a disengagement or “withdrawal” letter to the client, advising that representation has ended, and that the lawyer will take no further action on their behalf.  The letter should be sent by Certified Mail, or in-hand delivery.  This creates evidence that the client has received the letter and can prevent him/her from later asserting they were unaware of the withdrawal.
 
In litigation situations, be aware of federal/state regulations which may require that a motion to withdrawal be served on a client in a specific manner.  The withdrawal letter would be sent after the court has granted a motion to withdrawal, because in such situations, the attorney-client relationship is not terminated unless the court permits it.



Carlin Edelman, Broker,
Insurance Consulting Services, LLC

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Loss Runs or Loss Run Reports

Posted on March 7, 2013
 

Have you ever been asked by an insurance agent for a “Loss Run” from your lawyer's malpractice insurance carrier? 

A Loss Run (aka Loss Run Report) is a listing of reported claims, providing such information as the date of occurrence, type of claim, amount paid, and amount reserved for each.
 
The “Reserve” is an estimate of the amount for which a particular claim will ultimately be settled or adjudicated.
 
Insurance companies use this information to help determine the insurability of a law firm, and at what price they may offer a quote.



Carlin Edelman, Broker,
Insurance Consulting Services, LLC

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Disclosing Malpractice Insurance Coverage For the Law Firm

Posted on March 5, 2013
 

More and more states are requiring firms to disclose whether they do or do not carry lawyer's malpractice insurance. 

The purpose of the disclosure is to advise potential clients whether a lawyer has malpractice insurance that might be available to pay for damages caused by malpractice. Every state is different, but in Colorado, lawyers are required to report this information to the Colorado Supreme Court Attorney Registration Office.
 
Such disclosure rules may help a potential client decide who to hire as their legal counsel.  To read the Colorado Supreme Court's advisement regarding disclosure < http://goo.gl/H08Aa >



Carlin Edelman, Senior Broker,
Insurance Consulting Services, LLC

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Update: Claim Trends in Lawyers Malpractice Insurance

Posted on March 4, 2013
 

Have you ever wondered which areas of practice generate the most claims of legal malpractice?  For the first time, Real Estate matters are now the most frequent subject of malpractice claims against lawyers, overtaking Plaintiff work.
 
Results of a 2008-2011 survey of 53,000 insurance claims were recently announced by the ABA.  In previous studies going back to 1985, Plaintiff’s Personal Injury matters were the biggest generator of malpractice claims.
 
The activity that was most likely to generate claims was “Preparation, filing and transmittal of documents” followed by “Advice”.


Carlin Edelman, Senior Broker,
Insurance Consulting Services, LLC

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Top 10 Most Common Legal Malpractice Error Allegations

Posted on March 3, 2013


Dealing with any type of malpractice claim is probably one of the most unpleasant tasks a lawyer can face.  It only makes sense to do everything you can to avoid the time, stress and expense of dealing with a claim.

According to the ABA Standing Committee on Lawyers Professional Liability Profile of Legal Malpractice Claims, the Top 10 most common legal malpractice error allegations are as follows:

Failure to know/apply the law  11.3%
Planning Errors  8.5%
Inadequate Discovery/Investigation  8.8%
Failure to file documents/No Deadline  8.0%
Failure to calendar properly  6.7%
Failure to know deadline  6.6%
Procrastination  5.9%
Failure to obtain client consent  5.4%
Conflict of Interest  5.3%
Fraud  5% 

A thorough understanding of law is important, but don’t forget that improvements in client relations, and in-task deadline management can significantly reduce the likelihood you will face a claim.


To read the stats compiled by the ABA on where lawyers see claims, visit ABA website


Carlin Edelman, Senior Broker,
Insurance Consulting Services, LLC

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FEELING SECURE IN RETIREMENT

Posted on February 20, 2013


Malpractice insurance is one of those things you buy with the hope that you’ll never have to use it.  With that being the case, if you’re getting ready for your retirement, don’t forget to address retirement with your malpractice insurance agent and carrier.
 
Most malpractice insurance policies have provisions for Extended Reporting Period coverage (aka ERP's or sometimes tail coverage).  Depending on the carrier and the length of time you’ve been insured by them, some insurance companies may be able to offer free Retirement Extended Reporting Period coverage to you upon your retirement.
 
Extended Reporting Period coverage can give you peace of mind after your retirement, knowing that coverage is there, even after you stop practicing.


Carlin Edelman, Broker,
Insurance Consulting Services, LLC

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THE IMPACT OF SUING CLIENTS FOR FEES ON YOUR INSURANCE

Posted on February 19, 2013


I’ve filed a Suit for Fees against a client that did not pay for services.  What can I expect to happen now?
 
As previously discussed in another blog entry, 2 out of every 5 Suits for Fees results in a counterclaim for Legal Malpractice. Even if untrue, a client's 1st defense is often to claim that the attorney did a lousy job and that is why she didn't pay.

Once a Suit for Fees is filed, if the client does indeed file a countersuit for malpractice, you now will need to notify your malpractice insurance carrier of this claim.  This may very well result in the firm needing to pay its deductible, which is typically several thousands of dollars.
 
Also, if you decide to shop for malpractice insurance at renewal time, you’ll be required to disclose the Suit for Fees and the claim on applications. As a result some carriers will decline to offer offer terms - citing the Suit for Fees and/or claim experience, and others will only offer terms after a thorough review of an insurance company issued Loss Run Report, detailing the status of the claim and the associated expenses.
 
If the matter drags on long enough, even though the firm may have not actually committed any actual act of malpractice, the expenses associated could, and sometimes do, result in the carrier non-renewing the firm, which makes it more likely the firm could end up having to purchase coverage that is less comprehensive and more expensive.  Sometimes carriers will even add an exclusion to the firm's policy that excludes claims that arise out of Suits for Fees from coverage. 
 
All are factors to consider before filing a Suit for Fees, and the discussion of Suits for Fees should perhaps be included in the exit interview you conduct with associate attorneys when they leave your firm, to be sure the firm isn’t caught off guard by a Suit for Fee having been filed by an outgoing associate.

Carlin Edelman, Broker,
Insurance Consulting Services, LLC

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WHAT IS A STATE GUARANTY FUND? HOW DOES IT WORK?


Posted on February 10, 2013

Established by law in every state, guaranty funds are maintained by a state’s insurance commissioner to protect policy holders in the event that an insurer becomes insolvent or is unable to meet its financial obligations. The funds are usually financed assessments against all property and liability insurers regulated by a state.

While it’s rare that an insurance company becomes insolvent, this may be a consideration to make when purchasing malpractice insurance for your firm. Surplus Lines carriers and insurance reciprocal programs may not be afforded this same protection.

The Colorado Insurance Guaranty Association has a good FAQ page for more details about how it works in Colorado

< http://goo.gl/sE8sS >

Carlin Edelman, Broker,
Insurance Consulting Services, LLC



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WHAT IS A HAMMER CLAUSE?


Posted on February 3, 2013

Have you heard the term “Hammer Clause” in regards to your malpractice insurance policy, and wondered what that meant? Most malpractice insurance policies require your consent to settle claims.  This means that if you have a claim, and the insurance company has the opportunity to settle it, they will seek your consent to settle.
 
If you as the insured decide at that point not to settle, and it turns out later that the claim ultimately closes for a higher dollar figure than it could have  been settled at had you given your consent to settle, your firm is on the hook for the difference.  Here is an example -- 

Your insurance company recommends settling a claim for $50,000, but you do not give your consent to settle.  If in the end, the claim closes for $75,000, you would be required to pay the $25,000 difference between what it could have settled for and what it did settle for.
 
All policies vary in their language, but it’s something to keep in mind, should you have a claim and your insurer asks for your consent to settle.


Carlin Edelman, Senior Broker,
Insurance Consulting Services, LLC


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SOCIAL MEDIA, DISCOVERY AND ETHICS IN LAW

Posted on January 24, 2013

60% of doctors have changed an initial diagnosis or opinion after an internet search < http://goo.gl/N1e4z >. The internet is no less useful a tool for the attorney.

Attorneys all over the country are starting to use the internet and social media sites to their advantage.

One attorney defending an employer in a worker's comp case reported finding photographic evidence on Facebook of an employee skiing the weekend after sustaining an injury that allegedly had disabled him. Another used evidence of a cheating spouse to build his case in a particularly contentious divorce.

But, as they say, with power comes responsibility. Attorney Protective, Berkshire Hathaway's malpractice insurance program for lawyers, has included two very good articles in its recent online risk management newsletter that address some of the ethical issues that might arise when an attorney uses the internet in his practice < http://goo.gl/83Tok >

Thad Balsamo, Senior Broker & Manager of Broker Development
Insurance Consulting Services, LLC


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SUING CLIENTS FOR UNPAID FEES


Posted on January 13, 2013

Law Firms feel more pressure than ever to collect fees.  When firms are faced with having to make a decision on filing a Suit for Fee against a client, the firm should take into account that two out of every five Suits for Fees results in a countersuit for Legal Malpractice.

Before filing a Suit for Fees, the firm should ask themselves why the client didn’t pay.  If the answer is because the client doesn’t have any money, the chances of collecting on a judgment make the risk-reward ratio unacceptable.

If the reason the client didn’t pay is because the client believes the firm committed Legal Malpractice, the knowledge that two out of every five Suits for Fees results in a counterclaim of Legal Malpractice may make the decision for the firm.

Perhaps the best plan for firms to take in these economic times is to be more proactive early on in the relationship with the client by requiring cash retainers, billing the clients more frequently, and severing the attorney-client relationship earlier than in the past.

Carlin Edelman, Senior Broker,
Insurance Consulting Services, LLC


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SPECIALIST vs. GENERALIST BROKERS


Posted on January 5, 2013

Many brokers are able to obtain LPL Policies for a law firm – but that doesn’t make them a specialist. Claims Made Policies are very different than Occurrence Made Policies, and among this type of policy, Lawyers Malpractice Insurance Forms are known as “specialty lines”. Attorneys Malpractice Insurance Policies can vary greatly among the over 50 different forms available in the marketplace.

This type of policy form is complicated and if a firm doesn't have a broker who specializes in this very important coverage, they may end up with a policy that doesn't cover their firm in the event of a claim. Don’t trust this coverage to anyone other than a specialty broker like Insurance

Renee Krause, Owner,
Insurance Consulting Services, LLC


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LOSS ONLY DEDUCTIBLES 

Posted on January 1, 2013


Did you know that many Attorneys Malpractice Insurance Policies offer Loss Only Deductibles? Loss Only – aka ‘First Dollar Defense” deductible means if no actual “loss” is paid out by the carrier, then no matter how much claims expense paid out by the Attorneys Malpractice Insurance Carrier, the insured does not have to pay a deductible.

Renee Krause, Owner at ICS,
Insurance Consulting Services, LLC