Ten Tips for Avoiding Legal Malpractice

Statistics show that in any given year, a minimum of five to six insured lawyers out of every 100 in private practice experience a malpractice claim, according to the Colorado Bar Association. In other words, a firm with 20 lawyers could be the recipient of a claim every year. As exposure to legal malpractice claims continues to rise, it is an important function of law office management to establish effective loss prevention practices:

·   Develop a standard calendaring system – This should contain all items to be calendared, deadlines for the various cases being handled, as well as deadlines for critical events. It should also include frequent reminder dates. The most effective calendaring system will have tracking procedures that identify the author of a particular entry.

·   Know the signs of substance abuse and depression – Heavy workloads can often result in an attorney becoming depressed or compensating through substance abuse. Knowing the warning signs associated with each scenario can prevent the firm from being hit with a malpractice suit because of a dysfunctional attorney. Symptoms of substance abuse include Monday morning tiredness, missing deadlines and appointments and neglecting mail and phone calls. Behavioral changes associated with depression include misplaced anger, frequent bouts of crying, self-criticism, becoming easily distracted, and lack of interest in every day activities.

·   Maintain good client relations – When accepting a new client, an attorney should discuss the purpose for which the firm was hired, reporting schedules, fees and billing arrangements, and client obligations. All of this information needs to be documented in writing and given to the client. Also, be sure the lines of communication remain open throughout the attorney-client relationship.

·   Screen clients carefully – Establish a policy of screening clients using a pre-determined set of criteria. Hold each attorney accountable for using those criteria.

·   Conduct thorough research and investigation – Some of the most common errors include failure to correctly apply the law, failure to determine a deadline, inadequate discovery and investigation, poor planning, and errors in the choice of procedure. The attorney of record should review staff work to ensure the accuracy of their work.

·    Avoid conflicts of interest and matter – Avoiding conflicts of interest involves establishing and updating a database of all clients and matters handled. To avoid conflicts of matter, create the practice of circulating a “new matter memo” to all attorneys and support staff whenever the firm accepts a new case. 

·   Never become inappropriately involved in a client’s interests – Accepting a director role in a client’s company, investing in a client’s securities, transacting business deals with a client, agreeing to contingent cash fees, and soliciting investors for a client’s business can result in a host of problems.  For example, the firm could be held liable for the attorney’s activities as the director in a client’s company or face conflict of interest charges because of an attorney’s personal involvement or investment in a client’s business.

·   Document all work – Establish a system for verifying the accuracy and content of all documents such as letters, briefs, contracts and motions. Also create separate files to store all documents prepared or received for each client matter.

·   Avoid fee disputes – Document fees and the scope of work in all matters. Bill on a monthly basis unless the client has asked for a different arrangement. Provide the client with detailed billing statements that include who performed the work and how much time was required.

·   Never delude yourself into believing you are immune from a malpractice suit – Your best defense is to remain acutely aware of how prevalent malpractice suits have become. It is this awareness that will motivate you to establish and maintain effective loss control procedures.

Home Buyers: Make Securing Homeowner’s Insurance a Top Priority

At long last, your loan package has been approved, your closing date is just days away, everything you own has been packed, and all that remains is a quick call to your insurance agent to line up a homeowner’s policy. That’s when the bad dream can begin. 

Your agent may inform you that your new home is uninsurable because of a history of insurance claims filed by the previous owner. Despite home inspections and various required real estate disclosures, this could happen to you.

Securing homeowner’s insurance used to be one of the last tasks a buyer undertook before closing. In reality, it should be one of the first.

Before issuing a policy, insurers always check a property’s claims history. Water damage claims are red flags, of course, but homeowners can also set off alarms simply by inquiring about their coverage, without ever filing a claim.

Most insurance companies research past claims through a shared database called CLUE, which stands for Comprehensive Loss Underwriting Exchange. When you apply for homeowner’s insurance, the insurer will request a CLUE report to ascertain whether you or the seller have filed any claims during the past five years. Even if you currently own a home and have a squeaky-clean claims history, if you buy a house with multiple claims filed against it, you may not be able to obtain insurance coverage.

Regrettably, you cannot order a CLUE report if you are not the homeowner. However, you can ask the seller to order a copy of the report as a contingency to your offer.

If you are ever denied insurance because of past claims, you can request a free copy of your CLUE report. In the event of a dispute with your insurer, you have the right to ask that your account of the events be included in the report. If you are simply curious about your home’s history, you can order a copy from ChoicePoint, the company that manages the CLUE database.

It pays to spend the time and effort to educate yourself about homeowner’s insurance when seeking affordable coverage. Consider the following ideas: 

  • Learn the rules regarding homeowner’s insurance renewals in your state. Regulators of some states exercise   control over when an insurer can refuse to renew your coverage.
  • Pay for small losses yourself. Insurers take notice of customers submitting frequent small claims.
  • Think twice before calling your agent or insurance company. When you place a call, the insurer opens a claims file on you regardless of whether you actually file a claim.
  • Increase your deductible and consolidate insurers. To reduce your homeowner’s insurance premium, consider raising your deductible. Also, most insurers offer discounts if you insure both your car and home with them.
  • Examine your credit record. In addition to your past claims history, insurers often use your credit score to determine whether to issue you a policy.

The EEOC Strengthens Commitment to Filing Class Action Suits

In 2006, the Equal Employment Opportunity Commission changed its strategy when it announced plans to file more class action suits. This shift was predicated on the decrease in the number of private-sector discrimination-related class action suits and increase in wage-hour class actions. As a result of this decline in discrimination class actions, the Commission’s position may indicate a trend toward more government-led class actions in this area.

The EEOC is in a unique position to litigate this type of suit because it is not required to meet the strict requirements to maintain a class action set forth in Rule 23 of the Federal Rules of Civil Procedure. In addition, the agency isn’t hampered by considerations of whether the monetary compensation won will be worth the expense of a trial.

The Commission is also spurred on in its decision by the belief that a national approach to litigating workplace civil rights is necessary due to a lack of consistent effort on the part of the private sector. The Commission itself is guilty of not identifying widespread discrimination in the past, and this shift is seen as attempt to make the agency more proactive.

What means will the agency use to evaluate which cases require class action treatment? Its primary sources will be:

·               Data gathered through EEO-1 surveys of private employers of 100 or more employees

·               Analyses designed by private statisticians who act as consultants to the Commission

·               Charges filed by claimants

·               Its own databases

·               Pending litigation

·               Long-term analysis of EEO-1 reports

In light of this emphasis on rooting out systemic discrimination, employers need to be increasingly vigilant. Here are some guidelines that can help you prevent becoming party to an EEOC-initiated class action suit:

1.                  Keep your affirmative action plans updated so that when analyzing, the data will identify problem areas in recruitment, hiring, transfer, promotion, compensation, termination, or other terms and conditions of employment.

2.                  Review the criteria used for hiring, firing and other personnel decisions to identify standards or actions that can be perceived as discriminatory.

3.                  Review instances in which a personnel decision impacted negatively on an employee or employees to be sure that all criteria used to make the decision was job related and the result of the need to maintain business operations.

4.                  Provide updated training for management involved in interviewing, hiring, job assignment, compensation, job advancement, and termination to ensure that they understand their obligations under the equal employment opportunity laws.

5.                  Inform management of the negative impact that e-mails have on the defense of claims, especially if careless phrases are used, insulting comments are made or e-mails are used for inappropriate purposes.

6.                  Publish company policies that spell out a zero tolerance for all forms of discrimination, harassment, and retaliation. Train non-management employees in those policies and their obligation to report immediately any actual or perceived harassment, discrimination, or retaliation.

7.                  Post and regularly distribute policies regarding reporting harassment, discrimination, or retaliation.

8.                  Develop a program through which employees receive severance pay or other consideration in exchange for executing binding releases that comply with the Older Worker Benefit Protection Act.

9.                  Keep and regularly review electronic data to identify potential problems and to avoid the possibility of it becoming damaged.

Don’t Get Stuck Paying for Costly Storm Clean-Ups

Following a damaging fire, thunderstorm, hurricane, tornado, ice storm, or other disaster, one of your first concerns will be the structural damage your home has suffered and how to repair and restore it back to its original condition. In most cases, your homeowner’s insurance policy will pay for the labor and materials to repair your home and for you to temporarily live somewhere else while your home is uninhabitable.

But, what about the mess that the disaster has left behind? You may have anything from destroyed furniture and appliances to soaking wet insulation and lumber that must be cleaned up and disposed of somehow. Of course, this certainly isn’t an expense or a task that a homeowner wants to be worried with after a disaster. The good news is that your insurance policy may also pay for the expensive cleanup and disposal process.

A typical insurance policy will cover a reasonable expense for you to remove the debris from your property, but the damage must be caused by one of the causes of loss that your insurance policy insurers against. For example, let’s say your insurance policy covers fire and a fire has damaged your master bedroom, closet, and entry hallway. In the process, your clothes and bedroom furniture were also destroyed by a combination of fire, smoke, and water. Since your insurance policy covers fire, it will also pay for all your belongings and building materials destroyed by the fire to be removed from your property. On the other hand, do keep in mind that most typical insurance policies don’t cover losses caused by earthquakes. Depending on your insurer, this coverage may be added for an additional premium.

The cost of debris removal is included in the insurance amount covering your home, but if the amount of home damage and debris removal exceeds what your policy will pay, most policies will usually provide an additional amount for you to remove the debris.

A typical policy will also cover the cost to remove fallen trees on your property. The amount is usually up to $1,000 for multiple fallen trees and up to $500 for a single fallen tree. However, the coverage only applies with certain circumstances. Removal of fallen trees owned by you, the policyholder, are usually covered if they fell as a result of a windstorm; the weight of snow, sleet, or ice; or a hail storm. Removal of a neighbor’s tree that has fallen on your property is usually covered if it fell from fire; wind and hailstorms; vandalism; the weight of snow, sleet, or ice; and such. The fallen tree must have damaged a structure that is already covered by your policy, such as your home, fence, garage, or porch, for the coverage to pay for the removal. There are a few limited exceptions to this rule, such as if the fallen tree is blocking the driveway to the home or a handicapped person’s accesses to the residence. Otherwise, a fallen tree on your property will be your financial responsibility to remove.

Keep in mind that homeowner’s insurance policies can vary from insurer to insurer. Be sure to review your policy carefully to make certain you have the extent and amount of coverage you need. Don’t forget to confirm that you have enough insurance to cover both repairs and removal. If any of the provisions in your policy aren’t perfectly clear to you, then you should ask your insurance agent to thoroughly explain it. If your agent can’t explain your policy to your understanding, then it might be time to look elsewhere for coverage.

Take Steps to Prevent Workplace Bias Claims Before They Happen

The Equal Employment Opportunity Commission recently reported that work-related bias complaints increased to 75,768 during 2006 compared with 75,428 the previous year. Discrimination complaints had previously risen to a seven-year high of 84,442 in 2002, but then steadily decreased from 2003 to 2005. The most frequent complaints have remained consistent throughout the years, including allegations of discrimination based on race, sex or retaliation.

This upward trend in the number of suits filed should raise alarms for employers everywhere. The legal cost to defend an allegation of discrimination that reaches trial has been estimated between $75,000 and $200,000. This doesn’t include hidden costs like work time lost because of gathering evidence or giving depositions. It also doesn’t include costs associated with an appeal or with payment of a final judgment.

The National Center for Preventive Law (NCPL) at the California Western School of Law in San Diego recommends that employers practice what it refers to as “preventive law.” That means assessing legal risks and instituting solutions to prevent them from occurring.

To assist employers in creating an effective prevention program, NCPL has established the following guidelines:

·            Manage Compliance – Develop a corporate policy regarding discrimination and document in the employee handbook. Document the specific ways in which corporate policy enforces compliance. Maintain a record keeping system that indicates what actions were taken if policies were violated.

·            Contain Risk – Identify overt employee conduct that could lead to a lawsuit. Also look for less obvious misconduct that encourages or promotes discrimination.

·            Respond to Change – Maintain the longevity and continuity of your policies by including mechanisms that allow for necessary updates caused by new business activities or other organizational developments.

·            State Compliance Policy – Take every opportunity to restate corporate compliance policies, including such practices as having department managers discuss them during departmental meetings or by distributing fliers that remind employees about these policies.

·            Top Level Endorsement – Provide continuing opportunities for senior management to oversee and promote corporate compliance policies.

·            Create Compliance Accountability – Hold all staff members accountable for compliance in every activity they initiate or oversee.

·            Ensure Program Fairness – Be sure practices treat all employees fairly and guard against retaliation for raising compliance issues.

·            Maintain High-Level Oversight – Establish a Compliance Officer who has the authority to initiate, coordinate and review corporate compliance efforts.

·            Reward Success – Promote continued compliance through rewards such as monetary compensation.

Should Your Collision Coverage be Dropped?

If you are like most new car owners, then you probably paid the extra money to include the protection offered by collision coverage in your insurance policy. However, as your vehicle has now begun to age and depreciate, you’ve likely started to ponder if and when you should drop the pricey collision coverage that’s running up your insurance bill.

There’s not a one-size-fits-all answer to this question. After all, everyone won’t have the same comfort level on risk or the same insurance needs and wants. However, there are some factors that you can consider to help you determine if and when you should drop your collision coverage:

1. Determine the value of your vehicle.

The first thing you should do when deciding if you should drop your collision insurance is determine approximately how much your car is worth. There are several ways to go about this, but one of the best methods is by getting an actual cash value (ACV) estimate. Kelley Blue Book and N.A.D.A. guides are excellent sources. However, you might want to call your insurance agent to find out which ACV source is used by their claims department, as ACV figures will often vary slightly from source to source. Do remember to factor in the wear and tear on your vehicle. Dents, scratches, upholstery holes or tears, and fading or chipping paint are just a few of the factors that can lower your vehicle’s ACV.

2. Weigh your potential risk against the cost of your collision coverage.

Although your collision coverage premiums will generally decrease slightly as your vehicle ages, you still need to make sure that the cost of your collision coverage remains a worthy expense to cover damage that may or may not occur to your vehicle. Weigh what you’re paying every year for collision coverage against the potential risk of not having it. The ACV of your vehicle should also be a factor in your decision process. For example, the new car you bought several years ago may only be worth $3,000 dollars today, and if you’re paying $600 per year for your collision coverage, then you’re paying 20% of what your car is worth for just this one coverage.

3. What’s your deductible?

Your deductible is another important factor to consider. Most drivers usually select a collision coverage deductible between $250 and $1,000 dollars. You might have even selected a higher deductible to keep your premiums lower. In any case, you need to remember that your deductible is the amount of money you’ve agreed to pay out-of-pocket before your insurance coverage takes effect. You need to decide if the combination of your collision coverage premiums and the deductible amount you’d pay after an accident are still reasonable costs for the value of your vehicle. For example, you’d be looking at a $1,600 out-of-pocket cost for the year for your damaged vehicle if you have a $1,000 deductible and you’re paying $600 for your annual collision premiums. If your vehicle’s value is anywhere close to what you’d pay out-of-pocket, then you can see where you’re likely wasting your insurance dollars. On the other hand, if your vehicle would cost a great deal more to replace or repair than what you pay out-of-pocket with your collision coverage, then it’s likely worth the expense.

4. Can you live without the perks of your collision coverage policy?

You’ll need to decide how valuable the perks of your collision coverage policy are to you. For example, your collision coverage policy might offer a free rental following an accident. Without the collision coverage providing this, could you rent a car on your own or find alternative transportation?

The bottom line is that there’s no cut-and-dried answer about dropping your collision insurance. Consider the above points and how they apply to your unique situation before making your decision. You can always schedule an appointment with your insurance agent if you have any doubts, concerns, or questions during your decision process.

National Council on Compensation Insurance Says Younger Workers Are More Accident Prone

According to a study conducted by the National Council on Compensation Insurance, younger workers have more injuries and illnesses than older workers; but older workers have higher costs per claim. The researchers discovered that age is an important factor in overall claim costs, but the significance of age on claims frequency has lessened. This has been interpreted to mean that age may not play an important role in future frequency trends. However, the relationship between age and claim severities is basically unchanged.

Factors associated with age, such as average wages, claim durations, lump-sum payments, injury diagnoses, and number of medical treatments, comprised a large part of the reason for the differences in the severity of claims between younger and older workers. The differences in wages and duration of claims were the principal reasons for the differences in the amount of payouts between younger and older workers. Differences in wages accounted for approximately one third of the differences in the amount of payout, while the differences in the duration of claims accounted for almost one half the difference.

Older workers experience more high cost injuries, such as injuries to joints like rotator cuffs and knees. These were more commonly experienced by workers aged 45-64.  Workers aged 20-34 more commonly experienced ankle sprains. Carpal tunnel syndrome and injuries to the lower back are among the top 10 diagnoses for workers of all ages. The researchers pointed out that the differences in the types of injuries only comprised about a quarter of the difference in medical severities between younger and older workers. The real factor influencing the difference in medical severities between older and younger workers was the significantly higher number and different mix of treatments within a diagnosis. This alone accounted for 70 percent of the difference.

Less than 10 percent of the difference in medical severities is due to a slightly more costly mix of treatments for older workers. This was reflected in small differences in the average prices of different types of medical services. The greater number and different mix of treatments also contribute to the longer duration of payments for older workers.

As for trends in loss costs, the researchers noted that the baby boomers’ impact was apparent when the data was viewed historically, but the major impact of this aging workforce has probably already occurred and employers should not anticipate that the aging workforce would present a major problem in terms of future claims costs.

The CLUE Report: Don’t Be Left Clueless on Insuring Your New Home

If you don’t properly educate yourself on the home buying process, it can very well be like walking into a minefield. Most buyers at least have a novice understanding on areas like their credit, pre-approval, a home inspection, and so forth. However, most buyers don’t have a clue what a CLUE report is, much less what an important element it is when buying and insuring a new home. Considering that around 90% of all insurers underwriting homeowner’s insurance subscribe to the CLUE service, it’s certainly something that you should know about.

What Is CLUE?

The Comprehensive Loss Underwriting Exchange, or CLUE, is a database that allows auto and homeowner insurers to exchange information about property loss claims. Unless your state specifically requires it, prior notification isn’t required before your information goes into the system. ChoicePoint, one of the largest personal consumer data compilers in the United States, maintains the database. Property loss claims and even inquiries into coverage are entered into the CLUE database.

Your insurer can access the CLUE database when you apply for homeowner’s insurance on your new home. The system will allow them to see any past claims that previous owners filed on the house. It also allows them to see past inquiries on damages, even if there wasn’t a claim filed. You could find yourself in an insurance nightmare if a bad CLUE report causes insurers to be unwilling to provide you with coverage. Furthermore, it’s not just your new home under scrutiny. Old claims that you made on your previous home are also available through the CLUE database and can affect the cost and/or availability of homeowner’s insurance on your new home.

What Do I Do About CLUE?

The best thing you can do to keep CLUE from affecting the cost of your homeowner’s insurance and/or your ability to obtain insurance is to know your rights. Just as with any other credit reports, CLUE reports fall under the Fair Credit Reporting Act, or FCRA. This means that you’re entitled to certain rights, including the following:

* Notification if the insurer intends any adverse actions, such as increasing the cost of your new policy’s premiums or denying your new policy, based on the information they obtained from your CLUE report.

* Get a copy of your insurance scores and the actual CLUE report. The FACT Act is a recent amendment to the FCRA that entitles you to one free copy of your CLUE report per year. Aside from your one free copy, you’re entitled to get another copy of your CLUE report if you’ve had your policy canceled, coverage limited, premiums increased, or an application for insurance denied.

* Dispute incomplete information or inaccuracies within the CLUE report. You can do this at the ChoicePoint website. ChoicePoint is required by law to investigate your dispute. If you aren’t satisfied with the investigation by ChoicePoint, you can file a statement. This statement must be attached to all future reports.

In summary, you can see how a CLUE report can substantially impact your home purchase. Do keep in mind that you can’t obtain a CLUE report on a home that you don’t own yet. This means that you will need to ask your real estate agent to obtain a CLUE report for any property you’re considering purchasing.