As an industry leader providing Lawyers’ Professional Liability insurance to over 35,000 attorneys, we have been addressing several LPL related concerns over the past few weeks. We want to take this opportunity to share some of those concerns and our thoughts around them.
Question: Many of our clients have asked if there is coverage on a Lawyer’s Professional Liability policy for loss of income or business interruption due to the current virus crisis.
Answer: The answer to this question is no. Professional liability coverage or legal malpractice coverage is intended to cover malpractice actions associated with an attorney client relationship where professional services are being rendered. Further to that, for a plaintiff to be successful in bringing a malpractice action against a defendant attorney the plaintiff needs to prove that the defendant attorney failed to exercise a degree of care, skill and diligence commonly possessed by a member of the legal community. And because of their failed degree of care there was actual and ascertainable damages.
Loss of income or business interruption is a property coverage that is typically found in a Business Owner’s Policy (BOP). We suggest if you think you have a business income claim that you contact us and we can help.
Question: My business is slowing down and I’m currently not seeing my normal volume of clients. Should I consider canceling my malpractice insurance to save money?
Answer: Canceling your malpractice insurance during this time would be an unwise decision. Malpractice policies are written on a “claims made and reported basis”. In order for a malpractice policy to respond to a claim - you have to have coverage in place when the alleged act occurred and the coverage needs to be in place when the alleged act is reported. If you were to cancel your policy now - you could be exposing yourself to potential claims that may arise from work you did in the past.
History has shown a direct correlation to claims frequency and the economy, proving an uptick in claims during economic turmoil. With our current situation providing an uncertain economic climate - there is a high likelihood we will see in increase in incoming claims.
With all that said, not only is a professional liability policy a must for practicing law at this time – you also want to review your policy and ensure you are with a stable carrier – providing you with a complete protective suite of coverage.
Question: If my clients are slowing their payments to me or not paying me at all, should I sue them for fees?
Suing for fees can be a tricky proposition for a law firm. On average, about half of the time a firm sues for fees, they end up receiving a counterclaim for malpractice alleged by the client. Although the counterclaim may simply be a tactic used by the client in an effort to have the lawyer reduce their fee - this can turn into an unneeded stress for an attorney.
Answer: A few things to consider before suing for fees:
(1) The counterclaim for malpractice element. What is the deductible on your policy? Some carriers have an exclusion for counterclaims for malpractice that are initiated from a fee suit. Call USI Affinity - we can help you.
(2) Reevaluate the reasonableness of the fees you are seeking to recover. You cannot recover excessive fees. Reduce the amount accordingly.
(3) If it can wait - wait. For example, in NY the statute of limitations of legal malpractice is 3 years and the statute of limitations on breach of contract is 6 years. Wait 3 years and 1 day to sue your client for the fee after the engagement ends. That way you are out of the SOL for legal malpractice but you are still in the SOL for breach of contract(non-payment of fee).
Question: With the current situation shifting my workplace to a home office, is there anything I can be doing to reduce my cyber exposure?
Answer: With attorneys having professional and ethical obligations to protect privileged client information from unwanted access, minimizing your cyber exposure is very important. A turbulent time like our current situation, is when cyber criminals will try to turn a crisis to their advantage.
A few simple things you can consider doing to keep your client's data safe:
Use two factor authentication to access your email and work related files.
Use strong passwords on your various systems.
Log out when you are not using your computer.
Keep computers and other devices in a secure place.
Access company information with a VPN, especially if accessing a public network and/or unsecured public WiFi.
Question: Some states are allowing notary work to be done virtually. Is that covered under my Lawyers' Professional Liability policy?
Answer: Typically you must be physically present or the work is excluded from coverage. The point of the exclusion is to prevent coverage where a notary made no effort to confirm the identity of the signer. However, during these current times some carriers are taking the position that as long as the notary was in compliance with state requirements for remote notarization the policy would respond. The best course of action is to call USI Affinity to confirm that you have coverage.
This material is for informational purposes only. It is not intended to be exhaustive nor should any discussions or opinions be constructed as legal advice. The insurance policy language will determine the actual coverage afforded to an insured. Contact USI Affinity for any insurance questions you may have regarding your particular situation. USI Affinity is not responsible for the content of the information provided or for the consequences of any legal actions taken on the basis of the information provided.