Lawyers Insurance Archives - Lawyers Insurance Alliance

Preparing a Disaster Recovery Plan

Law firms face a variety of risks. There are the natural disaster risks like fire, flood, and snowstorms, And then there are other risks like litigation from property damage or bodily injury or theft and data loss.

The key for firms to rise above all these risks is preparation. Your ability to recover quickly may differ in your firm’s survival.

The following four steps will hopefully help you prepare a sound law firm disaster recovery plan:

Assess your risks. Before creating a plan to deal with potential disasters, you must know what they are. Take some time to think through the potential dangers your firm could face and how they could affect your operations.
Prioritize functions. Deciding the proper order in which operations should be restored is another vital piece to your disaster recovery plan. For law firms, typically, the first two most important functions are ensuring the safety of your students and teachers and then finding a new place to hold class; if necessary, Proper insurance can go a long way towards helping with newly incurred expenses as well.
Develop prevention and mitigation strategies Once you’ve determined your firm’s most essential functions, the next step is to develop strategies around them to prevent and mitigate the various types of disasters you may encounter.
Test and maintain your plan. As hokey as it may sound, testing out your disaster recovery plan may differ in its success should a real catastrophe occur.

If you are interested in finding out more about how to implement a proper disaster recovery plan for your law firm, please feel free to reach out to our agency, and we’ll be more than happy to help.

As an agency that specializes in law firm insurance, we understand the risks you face daily and how to protect you from them.

What is employee benefits liability?

Most law firms offer health insurance to their employees. And while those benefits help attract and retain qualified workers, errors in your plan’s administration can lead to lawsuits against your firm.

For example, suppose your firm hires a new paralegal. The new hire completes the necessary paperwork to be enrolled in the firm’s health plan. However, due to a clerical error by one of the human resource employees, the new teacher is not enrolled in the plan. Sometime later, the teacher is hospitalized with a severe illness and discovers she doesn’t have any health insurance. As the medical bills pile up, the teacher seeks restitution for the mistake and sues the law firm. A general liability policy does not cover this claim but rather an employee benefits liability policy.

Employee Benefits Liability An employee benefits liability policy typically covers errors and omissions for the following:

Accurately describing plan benefits and eligibility rules.
Maintaining files and records related to benefits.
Enrolling, maintaining, and terminating employees, eligible family members, or beneficiaries in benefit plans.

Covered Benefits

What constitutes “employee benefits”? This term generally includes the following:

Insurance Life, accident, dental and medical, and other types of insurance
Plans Pension, profit sharing, stock ownership, and savings, and other plans
Benefits Social security, workers compensation, disability, and unemployment benefits
Additional Tuition assistance, maternity leave, etc.

Policy Limits

This Liability coverage usually includes two separate limits. The Each Employee limit is the most the insurer will pay for any one employee, their family members, and beneficiaries. The Aggregate limit is the most the insurer will pay for all acts, errors, or omissions.

Cost

Employee benefits liability is a relatively inexpensive coverage to purchase. Policies will start with an annual premium of $250 to $300 and increase as the number of employees at your firm increases.

If you are interested in receiving a quote for your law firm, please contact our office.

Dual-role Employees

A risk management position is an example of a role that, even when filled by a lawyer, frequently involves both legal and non-legal work. “Attorneys can be hired in a myriad of roles not requiring their status as attorneys,” says Richard T. Seymour, former chair of the ABA Section of Labor and Employment Law.

When determining whether a dual-role employee is acting as legal counsel and thus invoking attorney-client privilege protection, courts should focus on function more than a title. Status is not the same thing as role. While risk managers’ views may be partially influenced by their legal degrees, their employer is not necessarily looking for legal advice, as opposed to business advice.

Just because certain positions (like risk management positions) are not part of a company’s legal group and don’t require a law degree doesn’t necessarily reveal the employee’s accurate and complete role. Whether a dual employee is functioning as in-house counsel is not a bright-line test.

Rather than focusing on labels and bright-line tests, the emphasis should be on how the company utilizes risk management employees. There is a lot at stake in determining the applicability of privilege, so the focus should be on whether the company’s employees are reaching out to the risk management director to seek legal advice. Risk managers can deal with critical legal issues.

Bringing Risk Managers Within the Privilege

If the applicability of privilege to a risk management employee is driven by function rather than form, then companies should consider how to characterize and implement those functions. Companies should give serious thought to dual-role employees like risk managers. The intent to preserve privilege cannot be assumed—the company needs to be specific that legal advice is being sought.

Bringing risk management employees within the privilege requires planning and foresight. Place risk management departments under the supervision and control of their general counsel and have the general counsel issue instructions to them. Operational changes may also help a court see the department as more legal than business. These could include: (i) modifying risk managers’ job descriptions to state that the position will involve the company seeking legal advice concerning matters they handle; (ii) requiring risk managers to keep separate files for legal and non-legal matters, and (iii) limiting email discussions on legal matters only to those who need to be involved in legal discussions.

What is medical payments coverage?

One of the questions we often hear is regarding the medical payments coverage on a law firm’s general liability policy. Many firms wonder what it covers and how it works.

The medical payments coverage referenced in your business’ commercial general liability policy can best be compared to the med-pay coverage found in your homeowner policy. This coverage provides payment for first aid, necessary medical and dental treatment, ambulance, hospital, professional nursing, and funeral services to persons other than the insured. The intent is to compensate people injured on the insured’s premises or due to the insured’s operations, regardless of fault.

Most law firm general liability policies come with medical payments coverage of either $5,000 or $10,000.

Medical payments coverage is often referred to as no-fault coverage because the injured party doesn’t have to prove the insured’s negligence to receive payment. Medical payments coverage is a way for a firm to take care of the injured party without filing a liability claim.

Flood Insurance Versus Water Damage

Is it covered by flood insurance or is it water damage covered by property insurance? Over the past year, we saw how many storms devastated many parts of the country, flooding homes and businesses, destroying roads, and ruining many lives.

From those storms, we received many calls about how insurance will respond to help law firms recover from the tragedies. So with that in mind, we want to share some insight into how a property insurance policy responds to a water damage claim and where flood coverage comes into play.

How your firm’s insurance policy will respond to these claims depends on how the water entered your office. And while every law firm’s property insurance policy differs, there are basic features common to all property policies.

WATER DAMAGE

A firm’s property policy doesn’t provide coverage for flood damage, but it does cover many types of water damage to your office.

For insurance purposes, the damage is considered to occur when water damages your office before the water comes in contact with the ground.

Your property policy would cover the following scenarios as they would be considered water damage:

A hailstorm smashes your window, permitting hail and rain access into your firm.
Heavy rain soaks through the roof, allowing water to drip through your ceiling.
A broken water pipe spews water into your firm.

FLOOD INSURANCE

As the name implies, a standard flood insurance policy, which the National Flood Insurance Program writes, provides coverage up to the policy limit for damage caused by a flood. The dictionary defines “flood” as the rising and overflowing of a body of water onto normally dry land.

For insurance purposes, the word “rising” in this definition is the key to distinguishing flood damage from water damage. Generally, damage caused by water on the ground at some point before damaging your firm is considered flood damage. A handful of examples of flood damage include:

A nearby river overflows its banks and washes into your office.
A heavy rain seeps into your office because the soil can’t absorb the water quickly enough.
A heavy rain or flash flood causes the hill behind your office to collapse into a mud slide that oozes into your building.

Flood damage to your home can be insured only with a flood insurance policy — no other insurance will cover flood damage.

FINAL NOTE

If, for some reason, a water-related claim is not covered by a flood or property insurance policy, losses from theft, fire, or explosion resulting from water are covered.

For example, if a nearby creek overflows and floods your office, and looters steal some of your furnishings after you evacuate, your property policy would cover the theft because it directly results from the water damage. H wever, the flood damage would be covered only if you have flood insurance.

We hope this provides you with insight into how both flood and property insurance will respond to water damage claims.
If you have any questions or would like to submit a claim, please feel free to give our office a call.

General Liability Basics

Law firms are growing at a tremendous rate, and we have been able to work with many of them in implementing their first insurance policy. In setting up a firm’s first insurance program, general liability insurance is the most basic and primary coverage. Just because it’s the essential coverage doesn’t mean it is understood by many outside the insurance industry. We wanted to create a blog post outlining the basics of a general liability insurance policy and why it’s so essential for a law firm to carry one.

What does general liability insurance cover?

Under a liability insurance policy, your insurance company will be any legal claims and defense costs for covered claims and lawsuits. Covered liability claims include bodily injury, property damage, personal injury, and advertising injury.

The amount of coverage a firm should purchase depends upon various factors. Most states require minimum liability limits of $1 million per occurrence and $2 million aggregate limits. Depending upon the size of your firm and other risk factors, it may be necessary to purchase additional limits.

General liability insurance is essential for law firms because even minor incidents can quickly turn into lawsuits in today’s litigious society. This is why insurance companies require firms to report any accident that could potentially result in a claim as soon as possible. This includes documenting the situation, forwarding any summons and legal notices, and cooperating fully in any investigations.

If you have any additional questions about how a general liability insurance policy can help your firm, please don’t hesitate to give our office a call at (702) 507-6999.

Preventing Crime

Preventing crime does not need to take up a lot of your time, nor should it cost money. You must take the time to proactively institute sound policies with your employees and some protective measures throughout your law firm.

Crime is a serious threat to any business, and law firms have not been immune. Poor procedures, inexperienced employees, and lack of control increase the likelihood of your firm experiencing some claims.

Here are some tips to help get you started:

Burglary

Reinforce any side and rear doors with cross-bars.
Secure all entrances with double cylinder, long-throw, deadbolt locks.
Protect windows and skylights with burglar screens, bars, or thick, unbreakable Plexiglass.
Affix a cash safe (if you have one) to the floor with surveillance cameras and sensor lights.

Employee Theft

Require two signatures on checks above specific amounts like $500 or $1,000.
Reconcile bank accounts and credit card statements weekly.
Limit access to safe, cash, and checks.
Change the safe combination immediately after any employee knows it is terminated.
- Control access to keys and, if possible, use a fingerprint scanner to access the building.

If you have any additional questions or want to find out how crime insurance can help protect your law firm, please don’t hesitate to call our office.

Boiler and Machinery Insurance

Boiler and Machinery Insurance is an often overlooked insurance that can help protect your law firm from potential insurance claims.

To help provide some insight into what Boiler and Machinery Insurance are, we have compiled a list of the most common questions associated with the coverage.

What is Boiler and Machinery (Equipment Breakdown) Insurance?

Equipment breakdown insurance for the financial losses incurred when equipment breaks down suddenly and accidentally. Causes of loss can include power surges, short circuits, motor burnout, and mechanical breakdown.

Why Do I Need this Coverage?

The costs associated with your equipment breaking down can be significant enough to affect the normal operations of your law firm.

Who Needs It?

Suppose your law firm has or owns any type of large equipment like heating and air conditioning equipment, communication networks, or any other large pieces of equipment. In that case, you should consider this coverage.

What Does this Coverage Pay For?

Equipment Breakdown coverage pays for the cost of repairing or replacing damaged equipment. It can also provide coverage for any income or extra expenses you incur to get your firm back up.

Our Law Firm Just Rents Our Building. Do I Still Need Boiler and Machinery Insurance?

Even if you don’t own your building, you still face potential losses associated with equipment within your building that could break down. For example, damage to your phone systems, fax machines, computers, and air conditioning units can cause significant financial damage.

If your firm has any additional questions on how this insurance can help, please give our office a call.

Blanket Insurance

One of the recommendations we usually make to law firms with more than one location is for them to add blanket coverage to their property insurance. As many law firms don’t have this coverage or know what it is, we thought we would provide some insight on how this coverage can help your firm.

This coverage allows you to use one limit of insurance across multiple locations. There are two situations where this usually applies to law firms:

If your law firm has multiple offices with many buildings, this insurance will make covering all of the buildings much more accessible.
Suppose your law firm has property that you move between offices frequently. In that case, it is much easier to have a blanket limit of insurance rather than adjusting your limits of insurance to account for the fluctuations in the property.

Who Needs Blanket Insurance?

If your firm has multiple locations or buildings that need to be insured, a blanket property insurance policy may be ideal.

However, any policy needs to be evaluated on a case-by-case basis. So it is essential to work with a knowledgeable agent who can customize coverage to your needs.

How Much Does It Cost?

One of the most significant benefits of this coverage is that it can usually be added to your policy for no additional premium.

If you would like to find out more about this insurance and whether your law firm needs the coverage or not, please feel free to contact our office.

Litigation-related Claims

Litigation errors breed the largest number of malpractice claims reported each year. In recent years, errors arising out of litigation accounted for nearly 36% of all reported claims. In the vast majority of cases, the statute of limitation on the client’s case expired and there was nothing left to do but assess the damages.

Below are the top three errors that lead to malpractice claims for attorneys.

FAILING TO MAINTAIN A COMPREHENSIVE CALENDARING/DOCKET CONTROL SYSTEM

Lawyers miss deadlines for a variety of reasons, but the most common is the lack of a good calendaring and docket control system. It does not matter whether you use a computerized case management and calendaring system or an old-fashioned tickler box. The most important aspects of a good docket control system are that (a) all relevant dates, whether they be statutes of limitation, appointments, or discovery deadlines be entered into the system and (b) several advance warnings of each deadline be given to the attorney and support persons involved.

WAITING UNTIL THE LAST MINUTE TO FILE THE COMPLAINT

One of the biggest mistakes that leads to malpractice suits is the tendency for the plaintiff’s lawyer to file a complaint at the eleventh hour – on the eve of the statute of limitation deadline. Although the lawyer believes he is within the “safety zone” because the limitation period has not yet expired, filing at the last minute is often a risky practice. In many cases, the plaintiff’s lawyer may be unable to perfect service of the summons and must file an alias and pluries summons to keep the action alive.

Sometimes the lawyer and/or his support staff forget to calendar the date the original summons expires. As a result, the action is barred because the statute of limitation expires before the summons is renewed. Other times, the lawyer inadvertently names the wrong defendant, and the opposing party files a motion to dismiss on that basis. If the complaint is filed at the last minute, the lawyer has little or no time left to investigate and determine the name of the proper party before the deadline passes.

For these reasons, we strongly encourage plaintiffs’ attorneys to file the complaint well in advance of the statute of limitation deadline. Filing early will give you more time to fix mistakes such as improper service or naming the wrong party. Hopefully, this extra time will give you an opportunity to correct mistakes before a malpractice claim develops.

FAILING TO KNOW THE CORRECT STATUTE OF LIMITATION

Sometimes, even with proper docket control systems, the lawyer fails to determine the correct statute of limitation applicable to the case. As different jurisdictions and types of cases all have different time frames, it’s important to verify the applicable statute of limitation.