2012 Claims Review
The 2012 calendar year results for claims exceeded our expectations. With continued declining frequency since 2010 and another year of very favorable development on prior years’ claims, Lawyers Mutual was once again able to achieve an underwriting profit. Claim counts were down in almost every practice area. As we begin 2013, we are seeing signs of improvement in the economy and the real estate market. As a result of targeted and carefully considered underwriting measures and risk management efforts, we do not anticipate that a growing real estate market will result in increased claims. We expect frequency to remain low in 2013.
As we look back at 2012, we see some common themes and claim scenarios. For example, we saw a large number of claims that resulted from our insureds missing out-of-state statutes of limitation on personal injury claims. One-half of the larger personal injury claims involved this scenario. Another common situation from this past year was the assertion of what we consider to be frivolous claims against our insureds where there was a large pot of money at stake. In those cases, the lawyer is typically the only deep pocket involved in the deal. It seems that claimants are more willing to spend money to pursue lawyers in cases where people are fighting over a deal gone bad or someone has lost money in some sort of investment. A third common theme from 2012 was the assertion of substantial claims arising from estate and trust practices. For the first time in Lawyers Mutual’s history, estates and trusts practice accounted for the highest percentage of the dollars incurred on new claims. This included claims arising out of both estate administration and estate planning.
Most of these claims could have been avoided with good risk management practices and procedures. An engagement letter is essential for every representation. That letter should define what the lawyer is going to do and what she is not going to do. During the representation, you should document anything unusual. And when the representation is completed, send a letter disengaging. Look closely for conflicts and potential conflicts in business deals. These are not always obvious. Where there are conflicts, be sure to define who you represent and who you don’t represent. To guard against missed out-of-state statutes of limitation, adopt client-intake procedures to determine the location of the accident. Train your staff to flag cases from other states. When there is an accident from another state, consider associating counsel in that jurisdiction to give you an opinion as to when the statute will expire. Taking these simple measures will greatly decrease the likelihood of a malpractice claim.
Will Graebe joined Lawyers Mutual in 1998 as claims counsel before being promoted to Vice President of Claims in 2009. He focuses his efforts at Lawyers Mutual on transactional matters and real estate. Prior to joining Lawyers Mutual, he worked at the law firm of Pinna, Johnston & Burwell. Will graduated from Stetson University and Wake Forest University School of Law.
(Reprinted from March 2013 issue of Put Into Practice.)