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How To Save In These Inflationary Times

Practice Tip – Confidentiality

It is human nature to want to talk about work. However, client confidentiality is an ethical obligation, not only for the attorney, but also for staff, outsourced workers, repair people and others who work with a law firm. For this reason, it is a good practice to frequently remind staff of the obligation of confidentiality.

 

How to Save in These Inflationary Times

A common misconception held myth about an insurance agency is that the use of an independent agent increases your insurance cost. This is a myth that is rarely true. Whether you contact an insurance company directly, as a “direct write”, or use an agent, the premium charged by the insurance company is the same. Of course, if all you do is contact that one insurance company, that company will provide you with only one price, its price. The price may be high or low. You as a consumer have no way of knowing whether it is competitive. In addition, the coverage may be broad or narrow. You as a consumer can spend a lot of time to research the coverage on your own or you can be assisted by an agency that is experienced and focused on offering you quality options.

 

Kaestner & Berry is an independent agency which has established relationships with a large number of different underwriters. We only assist lawyers in finding insurance products to protect their law firm/clients. We can save you money and time through our knowledge of the market place and our ability to obtain competitive quotes from different companies.

 

Kaestner & Berry has saved law firms in Missouri, Kansas, Illinois, Tennessee, and Texas millions of dollars. Be confident you are getting the best available coverage, at the best available price, for your law firm’s situation

Your LPL Policy and the Post Covid World

Planning a Career Change or Retirement

The Covid crisis has had a big impact on our society. Lawyers are “retiring” at record levels. Other lawyers are making a decision to change their lifestyle in other ways. You may be one of these people. Instead of the private practice of law, perhaps you are thinking of working for a business, a charitable organization, or the government?

Since all Lawyer Professional Liability (LPL) policies are on a “Claims Made” format, Extended Reporting Coverage, also known as “TAIL” coverage is an important consideration if you are planning to retire or shift your career path in the near future. Most LPL policies provide the ability of the retiring lawyer to purchase adequate “TAIL” coverage. However, “TAIL” coverage is EXPENSIVE!

For a solo practice, the ability to obtain “TAIL” coverage at no additional premium is an important consideration. However, in order to maximize this benefit, some planning is required.

In order to qualify for the “TAIL” coverage at no cost, there are certain conditions built into the policy. A typical restriction is that the Company will require the insured lawyer to have been insured by the same Company for (3) consecutive years before the attorney qualifies for NO COST TAIL. The length of time varies, so it is important that you review your policy or you can contact Kaestner & Berry to determine the length of the waiting period your policy requires you to be insured by the same company in order for you to qualify. In addition, there may be other restrictions in your policy on your ability to qualify for this free benefit. For example, some policies require the attorney to be at least 55 years of age. This restriction is obviously attempting to limit the no cost tail to lawyers that are actually retiring.

There are malpractice policies that make it easier to qualify for NO COST TAIL. For example, many policies do not have an age requirement to qualify. In addition, the granting language for the attorney to qualify for the NO COST TAIL coverage is typically, “retired or otherwise ceased the private practice of law.”

If you are thinking about applying to be a Judge, taking an in house legal position, taking a government position, or otherwise leaving the private practice of law, you will want to plan in order to avoid the need to purchase a costly tail endorsement.  The good news is that you may be able to qualify for this important benefit at NO COST! However, it does take planning.

For all firms, but especially for a solo practice, it is important to plan for this benefit.

Kaestner & Berry is always available to assist you with this planning. Contact your agent if you are interested in maximizing your insurance coverage.

Cyber Claims Are On The Increase

2021 is now in the rearview mirror. COVID has created challenges for businesses. As the world isolated much of our economy and workforce went virtual. Bad actors, known as “hackers”, saw opportunities in our rapidly expanded remote business environment. An October report by AON identified cyberattacks and data breaches as the No. 1 global threat to businesses.

Cyber threats have increased the risk for law firms as small businesses have become more dependant upon technology. According to an October 2021 report, cyber intrusion attacks have jumped 125% year over year. Ransomware and denial of service attacks are driving first-party coverage losses, with an average down time of 23 days and an average cost of $1.85 million according to the same report.

Ransomware attacks happen when a “hacker” uses “phishing” to trick someone in an organization into clicking on a link or downloading a file that then installs a virus on their computer. The malware then spreads to any connected networks. The hacker then makes a demand (ransom) asking for payment to decrypt the files. Even if the ransom is paid, statistics show that on average 10% of the data is not recoverable.

Protecting your passwords is the first line of defense against a hacker. Privilege abuse was involved in 80% of breaches. Hackers have a myriad of ways of stealing passwords. Once they have a password it’s difficult to detect the bad actors when they’re using legitimate credentials. Once they’re in, installing a keylogger is easy, and the hacker will have every keystroke you create during the workday. Many risk managers are now recommending the use of Multi-factor authentication, or MFA. An MFA is a security mechanism that requires an individual to provide 2 or more credentials to authenticate their identity.

Underwriters are reacting by reducing capacity on first-party coverage. The 2021 fourth quarter renewal cycle has seen drastic rate increases while at the same time reducing first-party coverage limits. This means customers are paying more for less. As the international crisis heats up in Europe, 2022 promises to bring more of the same.

If clients haven’t implemented MFA inside their email, workstations and other critical software systems they should do so immediately. Underwriters are requiring MFA more and more.

In the expanding world of technology, the need for and importance of cyber insurance grows exponentially. For law firms, a cyber incident can lead to a loss of business, reputational damages, regulatory penalties and lawsuits. The cyber insurance market is changing. However, the cost for a dependable cyber insurance policy is not prohibitive. Pricing for most solo attorneys is under $1,000, for the lowest policy limits. Contact Kaestner & Berry for more information on how to protect your business in the event of a cyber attack.

Cyber Risk Increase for Law Firms

Over the past 20 months, law firms have become a top 5 industry target for cyber actors/criminals, right behind financial institutions, healthcare, and educational organizations.

The sustained onslaught of cyber-attacks including ransomware, email compromises, and social engineering have dramatically driven up claims and incident costs and have either forced many insurers to raise rates, reduce capacity and in many cases, pulling out of providing cyber insurance for law firms.

According to one carrier that specializes in cyber coverage for law firms, the increase in the type of cyber claims has been as follows:

  1. Ransomware – The number of ransomware infections increased by 207% and the number of ransomware infections resulting in data exfiltration increased by 396%
  2. Social Engineering – The number of social engineering incidents increased by 153%
  3. Business Email Compromise – The number of compromises increased by 46%
  4. Data Breach – The number of breaches (non-ransomware related) increased by 41%

These increases are significant and highlight the risk that law firms face from a cyber claim. If you are interested in a quote to protect your firm from a cyber risk, contact Kaestner & Berry.

The “Step Rate” Increase

Lawyers buying malpractice insurance for the first time are surprised when their premium goes up year over year when nothing seems to change. This increase is on account of a standard insurance industry practice known as a Step Rate.

What is a Step-Rate increase?

The first year your firm has a professional liability policy, your coverage only includes the current year of legal work. As a result, the underwriter actually provides a discount. After the first year renewal, your premium will increase as the policy covers an additional year of legal work. The increase is a result of the underwriter gradually reducing the discount.

How long does Step-Rating last?

Step rating typically ends in 5-7 years depending on various factors, including the state in which you are located. You cannot avoid the impact of step rating by switching carriers as almost all carriers use step rating.

What else is making my rates change?

Changes in limits, deductible, areas of practice, number of attorneys, claims, changes in firm procedures as well as a carrier’s change in underwriting guidelines could impact your premium.