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Let’s start with the good news regarding malpractice insurance: You can still almost always find coverage. Other than that, attorneys are finding very little to celebrate in a continuing “hard market” for professional liability insurance. Many firms have already seen price hikes of more than 50 percent since Sept. 11, 2001, and most observers expect the trend to continue for at least another year. “It’s been going up and I think it will keep going up,” says Katja Kunzke, a senior vice president at Wisconsin Lawyers Mutual Insurance Co. But, Kunzke notes, it is a positive sign that insurers are generally not refusing coverage. Virginia lawyers had plenty to worry about when the parent company of the state’s largest insurer, American National Lawyers Insurance Reciprocal, went into receivership. More than 5,000 attorneys were left without coverage — but virtually everyone was able to find coverage and premiums were “fairly reasonable,” says John Brandt, who advises members of the Virginia Bar Association on malpractice issues. In addition to higher prices, shoppers frequently confront bare-bones policies. “When you are going through a hard market, insurance companies can and do take away some of the benefits,” says Adele Nighman, an insurance operations manager for the Attorneys Liability Protection Society. In recent years it was common for policies to cover defense costs in addition to any damages levied against the firm. Now, firms fequently must qualify for defense cost policies. Remember policies with two-year rate guarantees? “Those don’t even exist anymore,” says Dennis Duff, a vice president with Jamison Insurance Group. Put simply, the power rests with the insurance companies in this market. Firms with a spotty claims history or in high-risk practice areas, such as intellectual property and securities, can expect exorbitant price hikes. For example, Duff recently represented a nine-member firm that was the subject of two claims in the past year. When the firm was shopping for a new policy, its premiums jumped from $8,000 to $100,000 per year — even after a tenfold increase in its deductible to $100,000 annually. Duff says the firm’s partners chose to absorb the price hike rather than risk going without insurance. (In all but one state — Oregon — coverage is not mandatory.) If you’re looking for a new policy, especially given the current climate, view the application process as a sales pitch. Show your strengths. Include information about your client screening practices, risk management procedures, CLE courses completed and awards you’ve received, even if the application doesn’t ask for those things. “If [you] are a generalist, then show that you are a careful generalist,” says Kunzke, “If you are a specialist in a high-risk area, show that you are a good one.” There is a growing movement among states to require lawyers to disclose to clients if they do not carry coverage (surveys indicate anywhere between 10 percent and 40 percent of attorneys do not carry malpractice insurance). Currently, only five states — Alaska, New Hampshire, Ohio, South Dakota and Virginia — require disclosure, but at least seven others are considering similar proposals. The American Bar Association has tabled proposals about mandatory coverage as well as disclosure, though they may regain momentum in the year ahead. “I think lawyers are more afraid of that than they need to be, frankly,” says Kunzke. “However, if I was in private practice I would be embarrassed to have my clients find out I didn’t have malpractice insurance.” Brad Reagan is a New York City-based freelance writer. His work has appeared in The Wall Street Journal and the New York Post.

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