Best to report lawyers professional liability claims early
The advantages of reporting a claim or a potential professional liability claim sooner than later outweigh the disadvantages of hoping the matter goes away. Let’s start with the premise that you are insured with a reputable, established carrier in the lawyers professional liability insurance market. I cannot speak for some of the fly-by-night markets that seem to jump in and out of the Lawyer’s LPL market with the flip of a switch or bat of an eye.
Learned claims adjusters can share unbiased opinions on the concerning matter before it gets worse. If a potential claim gets nipped in the bud, you can save deductible costs and possible increased premiums. You may also divert a possible complaint to the State Bar.
You have a contractual duty under most lawyers malpractice insurance policies to report any matter could reasonably be seen as a claim or potential claim. If your failure to timely report infringes on the carriers ability to later defend, coverage could be jeopardized.
If your professional liability policy is up for renewal during the time you are contemplating reporting a matter, reporting on the current policy is a win/win situation. You get to reset your limits at renewal and you have clearly fulfilled your obligation under the policy.
The only downsides I see to reporting early is that lawyers professional liability carriers like CNA will often not let you increase your limits after a claim was recently reported. My advice here is to always insure for the limits you envision being comfortable with down the road. The difference in cost is not that significant. Secondly, reporting too often can make a professional liability underwriter wonder about client selection or your relationship with clients. Here my advice is to report but also review your client intake criteria and client management skills.
Any thoughts on this subject are appreciated!
Dan McKenna, JD, RPLU