Lawyers Professional Liability Forecast: Dark & Stormy, or Blue Skies Ahead?

Lawyers Professional Liability Forecast: Dark & Stormy, or Blue Skies Ahead?

LAWYERS PROFESSIONAL LIABILITY FORECAST: DARK & STORMY, OR BLUE SKIES AHEAD? MODERATOR: Robert B. Zelms, Esq. - Managing Partner Scottsdale, AZ Office, Manning & Kass, Ellrod, Ramirez, Trester LLP PANELISTS: Brian Braden - Vice President, Crum & Forster Insurance Company Mario A. D Aversa - Assistant Vice President, AXIS Insurance Andy Dorman, Esq. - Attorney, Reminger Co., L.P.A. Jody Harris, ARM, RPLU - Managing Director, Arthur J. Gallagher & Co.

Agenda The Panel and the Defense/Plaintiff Attorney Current Client & Insurer Issues Underwriting & Risk Considerations Trends that Could Impact Future Claims Summary

The Plaintiff and Defense Attorney The Plaintiff and Defense Attorney Gary A. Grasso Gary has focused his practice for over twenty-eight years in professional liability & ethics litigation. He has represented Chicago area lawyers and their firms before the federal and Illinois courts, and the Illinois Attorney Registration & Disciplinary Commission. As a litigator for over 28 years, Gary has handled a wide range of civil cases concerning physicians, attorneys, and serious permanent injuries. He has tried jury cases in the state and federal courts of Illinois and participated in numerous mediations. Gary has defended doctors and Chicago area hospitals, including Cook County Hospital (now Stroger Hospital), Northwestern and Children s Memorial Hospitals.

Grasso interview 2:45 3:31

Current Client & Insurer Issues Client Intake Issues Small, Medium & Large Size Firm Issues Small General Practice Firms Dabblers Need Client Intake Forms Medium Size Firms No GC, Client Intake Committees Large Firms Sophisticated Systems, More Conflict Issues Just say No Firms need to be selective Uptick in Suits for Fees New Client Questionnaires Client Intake Committees

Current Client & Insurer Issues Lateral Hire Movement Issues Working within the Firm s Culture and/or Process Transition of Case Files Firm Growth and Infrastructure

Current Client & Insurer Issues Firm Dissolution Issues Neglect of Law Practice Fee Suits to Maximize Receivables = Automatic Legal Malpractice Claims Need for Prior Acts / ERP Coverage

Current Client & Insurer Issues Regulatory Challenges for Law Firm Clients and Law Firms HIPAA Omnibus Rule Law Firm Business Associates who handle Protected Health Information (PHI) Financial Institutions regulated by Office of the Comptroller of the Currency firm audits of information security, IT, physical locations, personnel and business continuity plans Privacy/Security laws expanding to clients and firms

Page 10 ROUNDTABLE DISCUSSION

Grasso interview 7:00 8:27

Underwriting & Risk Considerations How Firm Size Matters Exposure Faced by Smaller Firms; and Exposure Faced by Larger Firms.

Underwriting & Risk Considerations Underwriting for Various Practice Areas Risk Assessment through Practice Areas (AOP) Concentration/Expertise in Selected Areas Rating Related to Practice Areas

Underwriting & Risk Considerations Underwriting for Various Regions Judicial Hellholes Litigious / Generous Venues Areas of Practice Complex / Routine Practice Areas

Page 15 ROUNDTABLE DISCUSSION

Grasso interview 15:15 16:12

Effective Risk Management Practices How Risk Management Matters Engagement/Rejection Letters Conflict Checks/Waivers End of Relationship Letters Internal Seminars; and File Audits

Effective Risk Management Practices Implementation of Risk Management Programs ERM - insurable and uninsurable risks Reputational, Business, Regulatory, Operational and Financial Risks Client (New & Existing) Audit Requirements - increasing risk management awareness Business Continuity Plans LPL Risk Management Programs Implementation - Hire a firm or manage internally with dedicated GC, set professional standards, document your policies, communicate your policies, monitor use and compliance, update as needed

Effective Risk Management Practices Correlation Between Claims and Lack of Risk Management Failure to Properly Screen Clients/Conflict Checks Lack of Engagement Letter/Improper Engagement Letters Deficient Deadline/Docket Control Taking on Work Outside of Ability/Specialty Area

Effective Risk Management Practices Risk Management and Underwriting/Risk Management & Premiums Intake/Conflict/Background Engagement/Docket/Calendar Supervision/Management/Reporting Premium/SIR

Grasso interview 20:00 21.38

Trends That Could Impact Future Claims Disaggregation of Legal Services Disaggregation The breaking up of the component parts of a case/matter Firm, In house counsel, Client s IT department, Outside E-Discovery Vendor, Co- Counsel, Contract Lawyers, Legal Process Outsourcing Company Increased risk with less control - Documentation of who is responsible for which tasks and what is and what is not the scope of representation. Scope of representation claims? Document, Document, Document Does the risk/reward ratio become too great Value to the firm diminished, but not the risk. Do we underwrite to the inherent risks?

Trends That Could Impact Future Claims Attorneys Not Retiring Competency Technology is Here to Stay; and E-Discovery

Trends That Could Impact Future Claims More Mergers as Firms Look for Growth Competition Driving Growth Conflicts of Interest Inability to Integrate, Socially and Technically

Trends That Could Impact Future Claims Reductions in Staff as Firms Contract Financial stability Outsourcing Changes in AOP, Lateral Hire and M&A

Trends That Could Impact Future Claims New Law Firm Structures, Virtual Law Firms Virtual Law Firms Ethical duties for data security Issues Virtual Law Firms Duty to provide competent representation via the web Firms offering all flat fee billing Firms offering unbundled legal services and limited assistance representation on a volume basis Consumer driven change making legal services affordable to everyone Client driven change making legal services efficient How will we underwrite these firms? What are the risks?

THE FORECAST?

The Panel ROBERT ZELMS, ESQ., Attorney, Manning & Kass, Ellrod, Ramirez, Trester, LLP rbz@manningllp.com JODY HARRIS, ARM, RPLU, Managing Director, Arthur J. Gallagher & Co. jody_harris@ajg.com ANDREW DORMAN, ESQ., Attorney, Reminger Co., L.P.A., Cleveland, OH adorman@reminger.com BRIAN BRADEN, Vice President, Crum & Forster Insurance, New York, NY brian.braden@cfins.com MARIO D AVERSA, Assistant Vice President, Professional Lines, Axis Capital, Berkley Heights, NJ mario.daversa@axiscapital.com