The Risk Manager, Winter 1998

Too many lawyers opt not to report to their professional liability carrier an event (read incident) that could develop into a malpractice claim because it is only a minor issue (read incidental). Their reasoning is that the situation is manageable, a little embarrassing, and they will quietly resolve it themselves. Reporting will only cloud their record with the insurance company and may cost them their deductible or increase the firm’s insurance premium.

This kind of thinking is dangerous and can be harmful to the health of your practice and your wallet. Here are the reasons we urge our insured lawyers to never treat an incident as incidental and report them to us without delay:

• Minor or potential errors often blossom into major problems involving large sums of money. The erring lawyer is not the best one to evaluate the seriousness of the situation or its potential to become a claim. Lawyers Mutual’s claims counsel, an experienced Kentucky legal malpractice lawyer, is ready to help you evaluate the issue and advise on the claims prevention or repair steps to take. He also will determine whether the matter should be treated as a reported incident which means should a claim later be made your current policy will provide coverage. This is more important than you may realize because our policy is an annual claims made policy. If a claim based on the incident is made in a later policy year, it will be against the liability limits of the policy enforce at the time the incident was reported. It will not reduce the limits of the policy enforce when the claim is made. The result is that incident reporting gets you more insurance coverage for your money.
• If what you considered to be an incident was, in fact, a claim and you failed to report it in the policy year it occurred, you lose all coverage. Better to be safe than sorry. Don’t forget that you are required to report incidents on your renewal application so you might as well do it sooner rather than later, get the help you need, and the comfort of knowing you are covered.
• Incident reporting costs your nothing. Our policy is to encourage incident reporting. Neither your deductible nor your annual premium will be affected in any way by reporting incidents in any number. Help from our claims counsel is policy service at no charge to insured lawyers.
• Your goals when an incident occurs should be to fix the problem, meet ethical requirements of client communication, treat the client fairly, and keep the client with your firm. Incident reporting is a strong first step in meeting all these goals.