When To Report A Claim
All Lawyer Professional Liability (LPL) policies are on a “Claims Made Basis”. To be more specific, this means the coverage is typically triggered when the claim is made against the insured and reported to the appropriate carrier.
Insurance underwriters are obviously interested in not providing coverage to an attorney who buys coverage after he or she is already aware of a claim or a potential claim. The carriers address this risk in two ways.
The application always asks an attorney if he or she is aware of a claim or potential claim that has not yet been reported. Under Missouri law, if this is presented as a “representation” in the application, the insurance company must proof the misrepresentation was false and material.
A “Claims Made” policy also provides there is no coverage for claims known but not reported during the policy period. This is set forth in the coverage section of the policy. As a result the insurance company does not have to demonstrate “prejudice” with this coverage defense. See Continental Casualty v. Maxwell 999 S.W.2d 882 (MO app 1990).
The bottom line is that the failure to report a claim or a matter that may give rise to a claim during the policy period that the attorney becomes aware of the matter, will jeopardize the coverage.
Contact Kaestner & Berry if you have any questions.
Balance This Thanksgiving
November is the month to give Thanks. I am truly grateful for our modern technology. Like you, my cell phone and computer make my life so much easier. However, there is a need for balance. I recently read that:
- “On average we spend 11+ hours a day digitally connected.
- On average, we check our phones more than 150 times a day.
- 88% of us use a second screen while watching TV.
- 61% of us feel jealous, depressed or annoyed after checking social media updates.
- 60% of us spend more time on computers than with our significant other…and that is just when we are home at the same time!
- There is still a significant amount of texting while driving.”
During this holiday period, spend some time disconnected from your technology and “connect” to your family, friends and colleagues. Give thanks for these personal “connections”. It is these connections that make our life worth living. In the words of Maya Angelou, “Be present in all things and thankful for all things.”
Happy Thanksgiving from Kaestner & Berry.
Beware of Ransomware Attacks
You may have seen reports of worldwide Ransomware attacks currently occurring. These attacks are targeting large and small businesses as well as personal email addresses. Anyone receiving a suspicious email is advised not to open any attachment or click any links.
Some signs of suspicious email include:
- You do not recognize the sender or if you know the sender, the message does not look like something they would send
- The subject and/or attachment name is vague or confusing
- Spelling or grammar errors
- You are part of many people who have been sent the message
- The message is unexpected or not business related
In today’s world, there are always cyber attacks occurring. Kaestner & Berry offers a Cyber/Privacy Breach policy from SafeLaw. This policy is designed specifically for law firms. The policy includes coverage for Cyber Crime and Ransomware. A Cyber/Privacy Breach policy is an excellent way to manage the worry you may have regarding the risk involved in the breach of your systems. Contact Kaestner & Berry for a quote.
Missouri Amends Ethics Rules
On September 26, 2017, the Missouri Supreme Court adopted an order that (effective immediately) amended the Missouri Rules of Professional Conduct. The changes are:
Rule 4-1.1 Comment
 To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology, engage in continuing study and education, and comply with all continuing legal education requirements to which the lawyer is subject.
Rule 4-1.1 Comment 7 and 8
Retaining or Contracting With Other Lawyers
 Before a lawyer retains or contracts with other lawyers outside the lawyer’s own firm to provide or assist in the provision of legal services to a client, the lawyer should ordinarily obtain consent from the client and must reasonably believe that the other lawyers’ services will contribute to the competent and ethical representation of the client. See also Rules 4-1.2 (Scope of Representation), 4-1.4 (Communication), 4-1.5(e) (Fees), 4-1.6 (Confidentiality of Information), and 4-5.5(a) (Unauthorized Practice of Law; Multijurisdictional Practice of Law).
 When lawyers from more than one law firm are providing legal services to the client on a particular matter, the lawyers ordinarily should consult with each other and the client about the scope of their respective representations and the allocation of responsibility among them. See Rule 4-1.2. When making allocations of responsibility in a matter pending before a tribunal, lawyers and parties may have additional obligations that are a matter of law beyond the scope of these Rules.
Rule 4-1.6 (c)
Confidentiality of Information
c) A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of the client.
There are also changes under Rule 4-1.6 (b)(5) allowing disclosure of client confidences for purposes of evaluating conflicts in relating to a change of employment or law firm merger, and under Rule 4-1.17 relating to the sale of a law practice.
Malpractice Claims Report
The Missouri Department of Insurance recently released it’s report on legal malpractice insurance for 2016. The report is illustrative of legal malpractice in not only Missouri, but also other states located here in the Heartland.
There was a slight increase in the number of claims. The number of closed claims in 2016 was 183. This represents a 2% increase in the number of claims when compared to 2015.
The average payment in 2016 was $145,046. This was slightly less than the average payout in 2015. However, the 10 year average payout is $126,057. As a result, the average payout in 2016 was $18,089, higher than the 10 year average payout.
The average payout reflects a trend towards an increasing value of legal malpractice claims. A recent example of this is a jury award in Jackson County, Missouri for $2.5 million against an attorney. To protect yourself against this trend, review your policy limits to make sure you have adequate policy limit to cover a claim.
You can rely on the experience of Kaestner & Berry. Mark Berry, of Kaestner & Berry, served as the head of the claim department for almost 20 years at a prominent legal malpractice insurance carrier located here in Missouri. During that time he handled thousands of claims for attorneys in Missouri and Kansas.