Working With Your Insurance Carrier When A Claim Occurs
You have a seriously unhappy client on your hands. Worse yet, you are served with a complaint by that client alleging legal malpractice.
What do you do? Your first reaction might be to pick up the phone and contact the client, either to unleash your anger or to try and fix what must surely be just a misunderstanding.
That would be a mistake.
But it is surprising how often the mistake happens. Understand this: once a client threatens to file a claim for malpractice – or even threatens to do so – an important change has occurred in the relationship. While good client communications is key to preventing malpractice claims, once a claim is threatened or filed, further communication with the client can do more harm than good.
For example, communications with a disgruntled client are not privileged. Anything you say can and will be used against you. Honest attempts to cure what must surely be a simple misunderstanding can become testimonial nightmares when brought out later in a malpractice trial.
Call Your Carrier
It is essential that you seek outside help in dealing with this situation, and the best place to turn is to your professional liability insurance carrier. Your carrier has the expertise and resources to assist you in responding appropriately to a claim or potential claim.
This is, after all, the reason you purchased legal malpractice insurance: to protect yourself from personal monetary liability for your mistakes.
One of the most common consequences of trying to hide a mistake – or just hoping that it will magically go away – is that an attorney fails to give timely and proper notice to the insurance company. Such delay may jeopardize your coverage for claim that would be otherwise covered under your policy.
Your Lawyers Mutual policy is a “Professional Liability Claims-Made Policy.” Only claims that are made to the company during the applicable policy year will be covered. Therefore, regardless of when an attorney mistake occurs, if a claim is first presented to Lawyers Mutual after a policy has expired there most likely will be no coverage.
Furthermore, every year when you apply for a re-issue of your professional malpractice policy you are responsible to report any potential claim of which you are aware. Failure to do so may result in loss of coverage for a claim that is first presented to the insurance company after the effective date of the new policy year if that claim should have been reported on the application or during the prior policy year.
Just because you think that you may be able to fix a mistake does not mean that you do not have to report it to your insurer. If you have reason to think that you breached a professional duty to your client, then you most likely have reason to foresee that such breach could be the basis for a malpractice claim against you.
Prompt Reporting is Key
Promptly reporting mistakes to Lawyers Mutual will avoid any uncertainty about the timeliness of your claim. Prompt reporting may also result in a claims repair opportunity that fixes the problem before a claim is even filed.
Remember that the Lawyers Mutual claims attorneys and the outside counsel we employ have extensive experience in claims repair. Our job is to fix attorney errors and mitigate damages resulting from those mistakes. We work with our insured attorneys every day in claims repair efforts large and small.
Cooperate in Your Defense and Be a Good Client
After you have reported a claim to Lawyers Mutual, our claims staff will ask you to provide us with a written narrative that summarizes the nature of your representation of the client and the circumstances of the mistake. More than likely, we will also ask you to send us a complete copy of your file so that we may conduct our investigation and determine whether the claim has merit. It is important for you to promptly provide us with the information and materials we request so that we may determine as soon as possible whether there is a chance for a successful claims repair or mitigation of damages that might be lost after a delay.
Providing the necessary information to Lawyers Mutual quickly also allows us to evaluate claims and determine whether there is a good prospect for settling the matter early and before incurring defense costs. In many claims, our claims counsel are dealing directly with your former clients who may want to avoid hiring another attorney if the claim can be settled without litigation. If our claims attorneys cannot adequately investigate and evaluate the claim due to an attorney’s delay in providing the requested file, the likelihood that the case will settle before a malpractice suit is filed is greatly diminished.
Should Lawyers Mutual retain defense counsel to defend you against a legal malpractice action, please remember that you are a client of that attorney, and treat him or her as you would want to be treated by your clients. Fully disclose all available information to your defense counsel. Promptly respond to all requests. As a lawyer, you know what makes a good client and what makes a difficult client, so act accordingly.
Finally, you have experience and training that will be valuable to Lawyers Mutual’s claims staff and your defense counsel. You usually know your former client much better than we do. You might also have expertise in the particular area of law. Your insight into the substance of the claim is important.