Blog Post

While it has seemed that Spring has been a bit late in fully arriving to us in Michigan, we all know that May will bring more Spring-like weather. Spring is a time for planting and renewal. It’s no wonder that people get the itch to do some Spring cleaning this time of year. It just feels like the right time to get more organized, clean up, and make some changes.

Speaking of changes, this is also a good time to consider your law practice’s malpractice insurance. Many attorneys think that it would be a big hassle to shop around for alternative policies when it comes to professional liability insurance. However, Paragon Underwriters makes that process quick, simple and hassle-free. We know that change is worrisome for many people. It’s easy to become unduly content with your malpractice insurance over the years and forget that there may very well be better coverage out there. But, it is out there!

 

 

A few months before your current coverage is set to expire, we encourage you to reach out to us for a discussion about options that will help protect you and your colleagues should you face the unfortunate experience of a client suing you for legal malpractice. Our insurance agency spends much time researching the new policies available to attorneys like you and we’d love the opportunity to share these details with you (or a representative from your law firm).

We became the best Professional Liability choice for Michigan Law Firms because of our reputation among attorneys like you. For nearly 50 years, we have demonstrated a commitment to providing Michigan lawyers with top-quality, customized professional liability insurance. Call us today, or at least 3 months before your current policy’s expiration date, so we can work together to find you the best coverage.

Most occupational groups have some amount of stress and anxiety as a result of a heavy workload,  and the challenges of daily requirements at the office. For 21st century attorneys, the pressure of representing clients and completing daily work tasks can have negative effects on the quality of work and significantly compromise the successful delivery of services to the clients who pay the law firm.
 
While it is often said that air traffic controllers suffer the most workplace-related stress, studies have shown that attorneys have much more stress than previously thought. The long hours that lawyers have to grind at the office coupled with the weight of responsibility that clients place on them leads to mistakes and grave errors. Being tired and not able to fully pay attention results in a failed representation that can lead to legal malpractice claims.
 

 
Studies underscore lawyers’ personal problems that interfere with their ability to ably represent clients in accordance with a recognized standard of care. This can be a recipe for disaster and can severely affect a lawyer’s reputation and that of the law firm. Lawyers in Michigan who have had malpractice lawsuits brought against them have cited exhaustion and case overload as reasons for their errors. Representing clients can be difficult when there are extenuating circumstances causing attorneys to fall short in the office.
 
Caffeine might be helpful in keeping you awake, but the pressures of daily life can lead to incompetence. This, in turn, leads to potential malpractice claims. At Paragon Underwriters in West Bloomfield, Michigan, we help lawyers protect their interests with professional liability insurance, but we also work with our clients in risk management — finding ways to lessen the exposure to malpractice claims.
 
 
Tags: Attorneys, Lawyers, Professional Liability Insurance, Paragon Underwriters, Malpractice, Law Firms, Risk Management

When speaking with law students and young lawyers about professional liability insurance and risk management, we always mention that we strongly encourage them to specialize. Why do we encourage them to specialize in a particular area of the law? The answer has to do with risk management.

Studies have shown that attorneys who are specialists are less likely than generalists to make a mistake that leads to a malpractice claim. This not only makes sense intuitively, but it is also backed by empirical data. CNA, the largest insurer of attorneys in the country, found that “nearly 70% of all business transactions claims are instituted against attorneys who reported that business transactions practice generated 5% or less of their annual revenues.”

The costs of being sued for malpractice – lost billable time defending the claim, expense of malpractice insurance deductible and a higher premium when you renew, stress, etc., – are so onerous, that attorneys will benefit greatly by reducing their malpractice risk. Specializing in a single area of practice (AOP) is a powerful risk reduction technique, because it enables an attorney to benefit from the “network effect” described above, and eliminates the risk of dabbling in practice areas that an attorney isn’t an expert in, while still producing income via referral fees for cases in other AOPs.

No doubt you’ve been put in the following position (probably several times a year): You’re at a party or family event, and a friend or relative approaches you with a simple legal question. They preface the question by telling you that it’s a minor situation so it won’t take you long to answer. Since it’s someone who trusts you and someone close to you, you don’t think twice about giving legal advice. In fact, you’re happy to do the favor and it feels good knowing you’re able to help them out. Not to mention, you really can respond quickly to their inquiry and save them some money in the process.

Providing legal advice like this can be very tempting for family members and close friends, but it could actually be quite damaging to you professionally. While your intentions are noble (we all want to help those closest to us), your actions might be harmful to you, your law firm and even to the person to whom you’re providing advice. Remember that, as an attorney, when you give legal advice, it can come back to haunt you. Even given casually, your legal opinion may be less thought-out than usual and not backed by the research you would typically conduct if a paying client requested it.

 

 

Furthermore, by providing informal, free legal advice like this to friends and relatives, you might be creating a conflict of interest for yourself by giving advice to a person who has not been through a “conflicts of interest” check first. Do you really want to put yourself in that potentially disastrous position? There are much better ways that you can help friends and family without putting yourself into harm’s way.

Paragon Underwriters reminds you that when asked a legal question by a friend, it may appear that you are merely giving advice to someone close to you, but you have to be aware when a relationship becomes a lawyer-client relationship. The minute this relationship is formed, lawyers are bound by the rules of their professional responsibility. The relationship begins when there is a mutual understanding that the client is going to confide in the lawyer and the lawyer is going to listen. The relationship may commence even if there is nothing in writing and even if no money has changed hands. Although there must be a mutual understanding that the client has engaged the lawyer and the lawyer has accepted representation, it is the lawyer’s responsibility to make it clear to the potential client when this has occurred, and when it has not. Defining the relationship with those seeking advice from the beginning can avoid confusion and ethical issues down the road. Providing casual legal advice to a family or friend can result in major legal liability, malpractice, or disciplinary action as the non-clients may have reasonably relied on the information given. Rather than put yourself at risk, make it clear to the non-client that though you are unable to offer them legal advice, you can refer them to legal resources intended to help those who maybe cannot afford representation.

Communication is key in these interactions. If a conversation is turning into professional work, it is the lawyer’s responsibility to either put a stop to it or make it clear that further discussion should take place in a more formal setting. Similarly, when the lawyer has no intention of representing a potential client, the lawyer has the responsibility to communicate that no lawyer-client relationship exists. It is also important to remember that if a family member or friend has a lawyer, you should resist the urge to give a “second opinion”. The fact is the other lawyer has spent a lot more time on the case than you and is familiar with a lot of facts that the person you’re speaking with may not have disclosed. Consider that before telling someone that you would handle a situation differently than that person’s lawyer.

Attorneys have to make decisions each day of their professional lives. Selecting legal malpractice insurance is certainly one of the most important decisions you will make. A law firm should do significant research before choosing which insurer to go with for their lawyers’ malpractice insurance. At Paragon Underwriters, we have put together some helpful tips to consider before making that selection.

Look at the Forest for the Trees

Remember to look at the big picture rather than starting out by being overly specific with the details. Evaluate what the insurer is offering as well as that company’s financial stability and credit rating according to AM Best. Also, think about the agent’s past experience and reputation. Ideally, you’ll want to stay with this insurer for a long time so consider this a long-term commitment and make sure you feel comfortable with both the agent and the insurer.

 

Experience

As the famous football coach, Vince Lombardi, said, “Practice does not make perfect. Only perfect practice makes perfect.” Look into how long the insurer has been in business and what type of experience they’ve had. Just because an insurer has been around forever doesn’t tell you enough about their success, culture or how they treat their clients. Before signing anything, you’ll want to know if the insurer has specialized knowledge of lawyers’ professional liability insurance. You’ll also want to know if they are new to offering professional liability insurance or if they have a well-established book and proven track record.

Specialization

There are a lot of insurance agents out there. There are, however, very few who truly specialize in legal malpractice insurance. This highly specialized field has certain nuances that make it easy to miss key factors. Firms like Paragon Underwriters have been specializing in professional liability insurance for attorneys for nearly 60 years and have made this our niche. We know this part of the insurance industry better than most other firms, especially a general insurance agent who does mostly home, auto and business insurance – that agent may do one of these policies in his entire career, we do them all day every day and insure nearly 1,000 law firms in Michigan.

The Financial Stability Factor

Will you be able to rest assured that you’re covered? After all, you have a lot at stake with your law firm. It’s more than simply a financial decision to make. Your reputation as an attorney and your firm’s reputation is on the line. You need to be positive that the malpractice insurer has the ability to continue to pay claims into the future.

We’re in a Commitment Here

With claims-made coverage business, there’s an easy entry to market for new malpractice insurers. Therefore, many new insurers target specific markets to collect as much premium as possible, but they won’t be around when the claims come in. You want to ensure there’s a commitment on the part of the insurer to stick around when the worst happens and you need the claims to be paid.

What’s the Insurer’s Reasoning

Finally, make sure to research the insurer’s claims philosophy. What type of consideration do they put forward to determine whether to pay a claim? Will they be the type of insurer to fight for every dollar or will they be willing to settle without a struggle?

At Paragon Underwriters, we want to see you succeed. We sincerely care about our clients and help steer them toward smart, financially prudent decision making. We believe the relationship between the insurance agent and the law firm is a very important factor in determining the best coverage and the best insurer to use. We will provide additional insight as to which insurer best fits your needs. These decisions take time and we believe in calculated decision making. We will begin to work with you early on in the process and ensure the insurer is the right choice for your firm. That’s why we’re here… to serve you and to always have your best interests in mind. Call us today to start the process and we guarantee you’ll be happy with the experience.

Lawyers have to make decisions each day of their professional lives. Selecting their legal malpractice insurance is certainly one of the most important decisions an attorney will make. A law firm should do significant research before choosing which insurer to go with for their lawyers’ malpractice insurance. At Paragon Underwriters, we have put together some helpful tips to consider before making that selection.

Look at the Forest for the Trees

Remember to look at the big picture rather than starting out by being overly specific with the details. Evaluate what the insurer is offering as well as whether you trust them. Think about the insurance agent’s past experience and reputation. The same is true of the insurer. Ideally, you’ll want to stay with this insurer for a long time so consider whether you feel comfortable with the relationship at the outset.

 

 

Experience

As the famous football coach, Vince Lombardi, said, “Practice does not make perfect. Only perfect practice makes perfect.” Look into how long the insurer has been in business and what type of experience they’ve had. Just because an insurer has been around forever doesn’t tell you enough about their success, culture or how they treat their clients. You’ll also want to know if the insurance company insures many other law firms or if they are new to this type of exposure. Always elect an insurer who specializes in professional liability and has a large book of business – the larger programs offer premium stability, superior policy forms and many value-added benefits which firms can take advantage of.

Specialization

There are many insurance agents and brokers out there. There are, however, very few who specialize in legal malpractice and professional liability insurance. This highly specialized field has certain nuances that make it easy to miss key factors. Firms like Paragon Underwriters have been focused on professional liability insurance for attorneys and financial professionals for a very long time. We have made this our area of expertise and we are proud to be a part of the Michigan legal community.

The Financial Stability Factor

Will you be able to rest assured that you’re covered? After all, you have a lot at stake with your law firm. It’s more than simply a financial decision to make. Your reputation as an attorney and your firm’s reputation is on the line. You need to be confident that your malpractice insurer has the ability to continue to pay claims into the future – when you may need them most.

With claims-made coverage business, there’s an easy entry to market for new malpractice insurers. Therefore, many new insurers target specific markets to collect as much premium as possible, but they won’t be around when the claims come in. You want to ensure there’s a commitment on the part of the insurer to stick around when the worst happens and you need the claims to be paid.

What’s the Insurer’s Reasoning

Finally, make sure to research the insurer’s claims philosophy. What type of consideration do they put forward to determine whether to pay a claim? Will they be the type of insurer to fight for every dollar or will they be willing to settle without a struggle?

At Paragon Underwriters, we want to see you succeed. We sincerely care about our clients and help steer them toward smart, financially prudent decision making. We believe the relationship between the insurance agent and the law firm is a very important factor in determining the best coverage and the best insurer to use. We will provide additional insight as to which insurer best fits your needs. We will begin to work with you early on in the process and ensure the policy you select is the right choice for your firm. That’s why we’re here… to serve you and to always have your best interests in mind. Call us today to start the process and we guarantee you’ll be pleased with the experience.

At Paragon Underwriters, Inc., we know that a law firm’s commitment to proactive risk management coupled with sound business practices can lessen the likelihood that a lawyer will face a malpractice claim. It can also help mitigate potential losses should a lawyer be sued. Our Risk Management Program for CNA’s Insured Lawyers is ideal for Michigan’s law firms. Minimizing and managing an attorney’s risk is essential. At Paragon Underwriters, we take great pride in putting together the best professional liability insurance coverage for our clients, but we also make it a part of our mission to teach (and preach) good risk management. One of the most important aspects of a responsible risk management program is for attorneys to bring their insurer into the claims process as early as possible – ideally as soon as a claim is noticed.

This practice is the most responsible action and can save a lot of money — both the attorney and the law firm. When a lawyer contacts the insurer or agent as soon as trouble is brewing, it helps get everyone prepared to handle the situation.

Reporting a potential claim early enables the malpractice insurer to begin working on a resolution, which helps get the attorney and the firm back to business without any external hassles or distractions. The insurer may determine that it is appropriate to retain legal counsel to assist with a pre-claim situation. Other services may include grievance coverage, subpoena assistance, 24/7 risk management hotline, deductible reduction and oftentimes cyber liability coverage.

It is very important to remember that making certain actions without consultation with the insurer can result in a coverage denial. Examples of this include admitting liability, assuming damages, voluntarily making any payments, or incurring claims expenses. Such actions will likely violate policy conditions, which may result in a denial of coverage. Policyholders should not take action without first receiving guidance from their insurance agent or insurance company. Early reporting may trigger deductible reduction features and the attorney’s policy may offer a feature which reduces the deductible if you report claims early or settle claims within a certain period of time (usually 12 months). This could reduce your deductible by as much as 50 percent.

Contacting your insurer or agent is a good way to avoid costly mistakes and problems. For example, misstatements on insurance applications may result in a higher premium or even the rescission of a policy based on wrong information. Call your underwriter or agent with questions about the application and the information requested. A phone call is an easy way to correct errors before they occur.

Do not hesitate to contact our professional liability team at Paragon to work with you in protecting your business. We make it our mission to help you manage the risk and avoid a catastrophic situation.