If you are an ALPS-insured firm and are unsure if you should report a situation, but it is on your mind, just call us and we can talk with you about your concerns and the issues involved in your specific fact pattern. Ultimately, it is your decision whether to report a potential claim but failing to do so has consequences. Talking through the issues with an ALPS Claims Attorney may help you realize whether you are worrying for nothing or that your concern is justified.
Some examples of situations which need to be reported to ALPS:
(Whether allegations have merit is not a consideration when it comes to timely notice.)
All of ALPS new policy forms provide a Supplemental Benefit to assist with the Defense of Bar Complaint. This is a significant benefit under your ALPS Policy — why not use it? Bar complaints often turn into civil claims.
Demand Letters or Emails seeking Money or Services
This includes current or former clients asking you to continue to handle work for them when you have developed a conflict or advised them that you will not handle their appeal, etc. It does not have to include a specific demand for money. Again, it does not matter if you believe the claim is meritless. This includes demands for Return of Fees.
Requests To Execute A Tolling Agreement
If an Insured enters into a tolling agreement without ALPS prior written consent, the Insured does so at their own liability and expense and shall be deemed to be in breach of the Insured’s duty to cooperate with ALPS. Call ALPS and send in written notice — we can discuss options for how best to proceed.
Any Payments or Admission of Liability
If an Insured makes any payment or admits liability without ALPS prior written consent, the Insured does so at their own liability and expense and shall be deemed to be in breach of the Insured’s duty to cooperate with ALPS. Please do not admit liability or try to resolve a potential claim for any amount, including your deductible, without notifying ALPS in writing.
Suit For Fees
If your firm makes the decision to sue a former client for unpaid fees after considering the costs and benefits, understand suits for fees have a significant likelihood of generating a counterclaim for professional malpractice. There is no such thing as a perfect file. Be sure to answer on your application that you sue clients for fees.
Why Choose Not To Report: Perception Is Not Always Reality
As a Senior Claims Attorney, I cannot tell you how many times I get the question, “How much will this increase my premium?” This question is asked in the very first minute of the initial phone call before anything is reported. There is a perception that immediately, upon ALPS or any insurer, receiving notice of a claim or potential claim, the Insured’s policy premium has already increased just by virtue of reporting a potential claim. That is simply not true. (ALPS must receive written notice in order to report a claim — a phone call is not notice of a claim or potential claim.)
Rather, if you call with a question, particularly whether or not to report a situation, an ALPS Claims Attorney will talk you through the issues and help you make an informed decision about how best to proceed. Everyone has heard, “Trust Your Instinct” or “Trust Your Gut” – there is likely a reason something is bothering you. In many cases, we will encourage you to report the matter in writing. Other times we will simply make a note that you called, and we discussed a situation which did not arise to the level of a potential claim.
Attorneys like to parse out language in a policy which, when it comes to the notice, is not the best practice. Be safe and report. Don’t jeopardize coverage.
ALPS’ policies require notice of more than just a Claim as that term is defined in the policy. It also requires notice of facts and circumstances “that could reasonably be expected to be the basis of a Claim.” So your policy requires you to report a claim or a potential claim. Be aware that your notice requirement has nothing to do with the ultimate merit of any claim or potential claim. Many times, the excuse we hear for failing to timely report is the attorney thought the matter did not have any merit. That is a losing argument in a coverage battle.
What If I Fail To Report A Potential Claim? So What?
If an Insured receives notice of an alleged error or omission and fails to report the alleged error in a timely manner, the Insured is placing their coverage for the alleged error under their policy in jeopardy. This is especially true if the Insured goes through a renewal of their policy without reporting the allegations. Each jurisdiction’s requirements are different. The critical point here is that professional liability policies are “claims made and reported.” Each policy is separate. You must have a current policy in place under which to report a current claim. ‘Claims made and reported’ coverage is not like auto coverage. The triggering — even in claims made and reported — is notice, not the act, error, or omission.
Failure to timely report potential claim or a claim can have significant consequences including possible loss of coverage for the claim and/or rescission of your malpractice policy. If you have any questions, contact ALPS.
When in doubt — report to ALPS!
Call ALPS if you have any question about whether a situation needs to be reported or not. ALPS Claims Attorneys are available to answer your questions. We can also assist with specific questions such as how to discuss a potential error with your client without admitting liability. Each case is unique. Your clients are important. So is your practice and your future. Don’t put any of those in jeopardy by failing to report a potential claim in a timely manner. We are here to help our Insureds — especially when you need us most. That is the ALPS difference.