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Malpractice insurance: How to look good for an underwriter

By Tony Ogden
Dolan Media Newswires

While legal malpractice insurance is a necessity, overpaying for it is not. One key to getting the best rate for legal malpractice insurance is showing the insurance underwriter a law practice that’s set up to be low-risk.

“No lawyer says, ‘Oh boy, today’s the day I get to talk to the underwriter,’” said Christian Stiegemeyer, one of the speakers at a recent ALI-ABA webinar titled, “Avoiding Malpractice Claims and Looking Good to Your Insurance Company.”

But how ever painful the process may be, “looking good to the underwriter is important because it can save you money,” said Stiegemeyer, who is director of risk management for The Bar Plan Mutual Insurance Co. based in St. Louis.

He advises attorneys to implement the following procedures to limit risk, and then be prepared to demonstrate that those procedures are being followed diligently:

Good calendaring

“Thirty to forty percent of claims derive from some mishandling of a date,” noted Stiegemeyer.

Dates can be missed by accident or due to special circumstances, such as a secretary going on vacation. Use an active reminder system such as a tickler system – a filing method that sorts reminders in the order in which they must be acted upon. A lawyer’s system should have dates come to his or her attention automatically, so no one has to retrieve them.

Also, make sure all calendaring is thorough by design.

Whenever calendaring a matter involves a physical document, there should be “confirmation on the piece of paper [itself] that the filing has occurred. Build into [your processes] the kinds of checks to ensure that necessary steps are being performed,” Stiegemeyer said.

Conflicts of interest

“You’re not going to convince the underwriter that you don’t need a conflict-of-interest procedure,” said Stiegemeyer.

Part of a firm’s risk management procedures should involve talking to a third-party attorney.

“You can’t judge your own conflicts. Talk to somebody who can give you independent advice,” advised Dan Pinnington, who also spoke at the ALI-ABA webinar and is director of practicePRO, an initiative by the Lawyers’ Professional Indemnity Co. in Toronto to provide attorneys with risk management, claims prevention and law practice management information.

Opening and closing files

Leaving clients’ files open can potentially mislead them into thinking a lawyer is still working for them when the case is closed.

“Have formal file opening and closing procedures,” said Pinnington. “Make sure that there’s a written retainer that very clearly identifies the client” and the scope of the work you will be doing for him or her.

Unique circumstances

Explain all unique circumstances and what processes you have in place to control risk. In an office-sharing situation, for example, Stiegemeyer said lawyers should demonstrate to the underwriter what they do to ensure that they don’t enter into an attorney-client relationship with the other attorney’s clients.

“I recommend that the co-tenant lawyers agree among themselves on language to be used in fee agreements and/or engagement letters that explains the arrangement and states with specificity which office sharing lawyer is responsible for the representation and specifically which ones are not,” he said.

Past mistakes

Since the underwriter is going to find out about past malpractice claims and complaints anyway, be honest and upfront about them.

“Most critically, explain how [you] have changed your procedures to make sure it won’t happen again,” Stiegemeyer said.


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