LOOKING GOOD FOR THE UNDERWRITER
Completing an application for malpractice insurance is hardly what a lawyer would describe as a pleasant task. But you must still approach it in a professional way if you want the optimum result from the underwriting process
In today’s economy, it seems everyone is looking for the “best deal” in virtually every purchase they make—which is true for lawyers and their professional liability insurance, too. The good news is that insurance companies also are looking to provide the best possible premium offer in today’s competitive market, by applying all possible credits and no unnecessary debits when considering the lawyer’s application in the underwriting process.
So how can you help an underwriter achieve that end? All lawyers can go a long way in ensuring they receive the best possible consideration by taking a few commonsense steps before submitting their applications. Here are basic but essential things to know.
Understanding the Underwriter’s Perspective
To begin, there are some important “viewpoint” issues to keep in mind when applying for malpractice insurance. First, underwriters are not reviewing the application to see if they want to hire the lawyer, but rather to determine what type of potential malpractice risk the applying lawyer presents. The underwriter already knows that most malpractice claims are made against successful, accomplished lawyers who have practiced for many years before having a claim. Consequently, if you try to assuage an underwriter’s concerns about a lack of risk avoidance processes by asserting it “has always been done this way” and “there has never been a problem” in your entire career, it only invites underwriters to conclude they are looking at the application of one lucky lawyer.
Second, underwriters are, like the applying lawyer, professionals who are well trained in their craft—and they take their job of properly rating the potential insured seriously. However, it is only with the information supplied by the applicant that they can apply their training and experience to achieve the proper rating. Therefore, the more the lawyer can help the underwriter understand the lawyer’s practice from the perspective of the firm’s legal malpractice risk potential, the better the result will be for the lawyer.
Here then are tips on how to help the underwriter understand your risk potential.
Getting Down to Business
The first step is to review the entire application before beginning to fill in any responses. This simple step will help you see what kind of “picture” the application will ultimately paint of your law firm. Also, if you have submitted previous applications for coverage, review those as well before starting on the current one. This review can identify what information may need to be gathered for particular answers so that it can be readily compiled in a timely fashion, rather than you doing so in a rush just to get “something” on the application to keep the processing moving along.
Turning to the application itself, it is important to complete all the questions on it. It may not be readily apparent why a particular question is pertinent to the underwriter’s task, but unanswered questions slow down the process and require follow-up inquiries. And, at worst, unanswered questions may leave an underwriter little discretion in how to rate the application.
In the same vein, your answers should be legible and unambiguous. Like the unanswered question, undecipherable handwriting and cryptic responses slow down the process and prevent the underwriter from being able to responsibly evaluate the application.
In addition, to the best of your ability, be specific when providing date ranges. For example, when asked to provide information regarding the time period of a prior policy’s coverage, you should respond in terms of “Month/Day/Year to Month/Day/Year”—not simply “Month/Year to Month/Year.” Providing complete dates enables underwriters to eliminate from their evaluation undue concerns over possible lapses or gaps in coverage.
Regarding basic risk management, the underwriter knows that there are some tools every law firm should have in place, such as calendaring and docket control procedures, the use of engagement, non-engagement and closing letters, and conflicts of interest procedures—all of which help mitigate the risk of a claim if used properly. A lawyer who can make the law firm’s processes understandable to the underwriter allows that underwriter to rate the lawyer more highly. At the same time, though, when an underwriter reviews an application that makes it appear the lawyer and firm do not take the use of these malpractice avoidance tools seriously, the underwriter will naturally be concerned.
Thus, from a malpractice risk perspective, the more frequently and consistently the firm uses such tools, the better it looks to the underwriter. For example, the underwriter can tell the firm takes seriously its responsibility to avoid conflicts when the application includes something like this regarding the firm’s conflicts of interest checking system:
• The firm checks prospective clients for conflicts of interest prior to the initial intake meeting, at the conclusion of that meeting, and as an ongoing process when new parties, witnesses or experts enter the case.
• That process includes a check of the prospective client’s name against a database of all current, former and declined clients.
• The process also includes review and approval by all firm attorneys of the prospective client and the anticipated matters and issues of the representation.
However, there are lawyers who respond to the conflicts of interest inquiry by stating that because of the type of law they practice, or the type of clients they represent, they do not have conflicts of interest issues. Beware that route. The underwriter will inevitably question how well such an attorney understands conflicts of interest generally—and how serious the attorney is about discovering them and dealing with them appropriately.
Beyond the Basics: Additional Types of Questions
Of course, depending on the type of practice or office arrangement a lawyer has, additional issues can arise in the application and underwriting processes. To illustrate, a typical example involves lawyers who work in an office-sharing arrangement, since it is not uncommon for such lawyers to present themselves in a way that may potentially confuse clients as to the nature of the office arrangement. Ultimately, if office-sharing lawyers look like a “firm” to potential clients, it is possible for the malpractice liability of one of them to be imputed to the group.
To avoid this concern, office-sharing lawyers should take steps to avoid any possible confusion about the nature of their relationship. Think in terms of signage, advertising, internal procedures, fee agreements and engagement letters, phone answering responses and the like. Everything should be handled in a manner that indicates the client is retaining the services of only one of the group.
Be aware, too, that typically an underwriter first becomes aware of such a potential issue in reviewing the applying lawyer’s letterhead. If the application states coverage is being requested for only one attorney but multiple attorneys are listed on the letterhead, the underwriter may not be able to rate the application solely for that one attorney.
As another example, the application may inquire about the lawyer’s Web presence, asking for the firm’s Web site address. Although law firms ordinarily consider their Web sites as client-generating tools or informational resources for their market members, these sites also provide a wealth of information to underwriters, who will look for consistency between the application and the firm’s site, particularly in the following:
• The areas of practice areas listed
• The firm’s corporate status (e.g., partnership, LLP, LLC)
• The number of lawyers in the firm
Especially troubling for the underwriter are Web sites that list practice areas not listed in the application. Is the law firm “dabbling” in areas outside its expertise? Discrepancies between the firm’s site and the application will need to be resolved.
Lastly, while much of the information requested in the application is more general in nature, some questions do touch on issues very personal to the lawyer, most particularly those requesting explanations of prior malpractice claims or disciplinary complaints. Although this portion of the application may be a reminder of an unpleasant interlude in the lawyer’s career, it is still important to address such matters forthrightly. Perhaps the most important issue to address in such a situation is what steps the lawyer has taken to resolve the cause of the previous problem so the underwriter can feel assured it will not reoccur.
The Best Approach for the Best EvaluationThere is probably no lawyer who looks forward to completing an application for malpractice insurance. Nevertheless, lawyers who allow a distaste for the process to affect how they complete the application can detrimentally affect their ultimate rating by the underwriter. However, if you instead approach this necessary task in a forthright, professional manner—treating the process, the questions and that unknown underwriter on the receiving end of the application with respect—you can go a long way toward obtaining the insurance carrier’s best possible evaluation. Take the commonsense steps outlined here and you’ll be glad you did.
About the Author
Christian A. Stiegemeyer is the Director of Risk Management for The Bar Plan Mutual Insurance Company and Executive Vice President of The Bar Plan Foundation. He also directs The Bar Plan’s Practice Management Program, providing on-site reviews of law firm practices to help improve risk management and case handling procedures.