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Background

Twenty-two years have passed since California voters passed Proposition 215, permitting the medical use of cannabis in the state. Since then, twenty-nine more states have followed California’s lead,1 with nine of those states and the District of Columbia also authorizing recreational cannabis use.2 Legalization at the federal level seems inevitable, but predicting a timeline for meaningful, long-term congressional action has so far been a fool’s errand.

In the meantime, cannabis growers, dispensaries, and ancillary service providers (“cannabis clients”), along with the professionals who represent them, are captive to the whims of each successive White House administration. Under President Obama, this meant assurances that the federal government would not interfere with state cannabis regimes pursuant to the Cole Memorandum, issued by the U.S. Department of Justice. President Trump, on the other hand, has offered no such assurances, and U.S. Attorney General Jeff Sessions rescinded the Cole Memorandum in January 2018.

Ethical Duties

The primary ethical consideration for attorneys representing cannabis clients is American Bar Association (“ABA”) Model Rule 1.2(d), which prohibits attorneys from “counsel[ing] a client to engage, or assist[ing] a client, in conduct that the lawyer knows is criminal or fraudulent” but adds that “a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.” This language has been incorporated into every state’s version of Rule 1.2 with only slight variations.

Cannabis is illegal under federal law, and in the wake of state legalization efforts state and local bar associations grappled with the conflict between Rule 1.2 and the cannabis industry’s need for legal services. With few exceptions, the majority of ethics opinions concluded that providing advice to cannabis clients is consistent with Rule 1.2 as long as the attorney also advises the client about related federal law and policy. Exactly what this disclosure might entail is discussed in the following section.

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Attorneys have to make decisions each day of their professional lives. Selecting legal malpractice insurance is certainly one of the most important decisions you will make. A law firm should do significant research before choosing which insurer to go with for their lawyers' malpractice insurance. At Paragon Underwriters, we have put together some helpful tips to consider before making that selection.

Look at the Forest for the Trees

Remember to look at the big picture rather than starting out by being overly specific with the details. Evaluate what the insurer is offering as well as that company’s financial stability and credit rating according to AM Best. Also, think about the agent’s past experience and reputation. Ideally, you'll want to stay with this insurer for a long time so consider this a long-term commitment and make sure you feel comfortable with both the agent and the insurer.

Experience

As the famous football coach, Vince Lombardi, said, "Practice does not make perfect. Only perfect practice makes perfect." Look into how long the insurer has been in business and what type of experience they've had. Just because an insurer has been around forever doesn't tell you enough about their success, culture or how they treat their clients. Before signing anything, you'll want to know if the insurer has specialized knowledge of lawyers’ professional liability insurance. You’ll also want to know if they are new to offering professional liability insurance or if they have a well-established book and proven track record.

Specialization

There are a lot of insurance agents out there. There are, however, very few who truly specialize in legal malpractice insurance. This highly specialized field has certain nuances that make it easy to miss key factors. Firms like Paragon Underwriters have been specializing in professional liability insurance for attorneys for nearly 60 years and have made this our niche. We know this part of the insurance industry better than most other firms, especially a general insurance agent who does mostly home, auto and business insurance – that agent may do one of these policies in his entire career, we do them all day every day and insure nearly 1,000 law firms in Michigan.

The Financial Stability Factor

Will you be able to rest assured that you're covered? After all, you have a lot at stake with your law firm. It's more than simply a financial decision to make. Your reputation as an attorney and your firm's reputation is on the line. You need to be positive that the malpractice insurer has the ability to continue to pay claims into the future.

We're in a Commitment Here

With claims-made coverage business, there's an easy entry to market for new malpractice insurers. Therefore, many new insurers target specific markets to collect as much premium as possible, but they won't be around when the claims come in. You want to ensure there's a commitment on the part of the insurer to stick around when the worst happens and you need the claims to be paid.

What's the Insurer's Reasoning

Finally, make sure to research the insurer's claims philosophy. What type of consideration do they put forward to determine whether to pay a claim? Will they be the type of insurer to fight for every dollar or will they be willing to settle without a struggle?

At Paragon Underwriters, we want to see you succeed. We sincerely care about our clients and help steer them toward smart, financially prudent decision making. We believe the relationship between the insurance agent and the law firm is a very important factor in determining the best coverage and the best insurer to use. We will provide additional insight as to which insurer best fits your needs. These decisions take time and we believe in calculated decision making. We will begin to work with you early on in the process and ensure the insurer is the right choice for your firm. That's why we're here... to serve you and to always have your best interests in mind. Call us today to start the process and we guarantee you'll be happy with the experience.

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Lawyers’ Toolkit 4.0: A Guide to Managing the Attorney-Client Relationship

Introduction

Documentation of the attorney-client relationship represents a critical risk control technique. CNA has developed the following Lawyers’ Toolkit 4.0: A Guide to Managing the Attorney-Client Relationship to assist attorneys in creating documents that will enable them to better manage their interactions with potential and actual clients. Documentation of the scope of the representation and the mutual responsibilities of the attorneys and their clients can often be a deciding factor in determining the responsibilities of both parties. These sample documents are designed to establish client expectations, reduce client misunderstandings, improve client communications, and provide opportunities for additional services. The use of these documents may not prevent legal malpractice claims, but can support a stronger defense in the event a claim arises.

This Guide includes the following sample documents:

• 20 engagement agreements
• 2 awaiting further action letters
• 2 non-engagement/declination letter
• 4 conflict of interest waivers
• 1 closing matter/disengagement letter
• 20 Other Engagement Letter Clauses
• 2 termination/withdrawal letters

Several of the sample documents include language addressing joint or dual representations and discuss prospective and actual conflicts of interest. Sample conflict of interest waivers are included for reference. Attorneys also should consider applicable legal ethics rules as well as the relevant risks associated with joint or dual representations prior to accepting such engagements. Joint or dual representations should be undertaken only with full disclosure to clients regarding the relevant risks, and only when such representation is in the best interests of the clients. From a professional liability perspective, engagements undertaken where a conflict of interest exists are inherently risky, irrespective of obtaining signed conflict of interest waivers.

In addition, the first three sample engagement agreements include draft language for contingent fee, hourly fee, and flat fee arrangements. Attorneys should incorporate the appropriate fee-agreement language from one of these first three sample engagement agreements when using one of the seventeen other engagement agreements included herein.

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Description of Practice Area

As an area of practice, family law includes all litigation and legal services related to antenuptial and domestic relationships, separation and divorce, alimony and child support, child custody, surrogacy and adoption.

Frequency of Family Law Claims

CNA claim frequency in the family law area of practice has been consistently higher when compared to all other areas of practice in the last six year. In fact, the most recent data reflects and upward trajectory of family law claims.

Claim counts arising from family law have increased from 98 incurred claims in 2007 to 245 incurred claims in 2016.

Quick Stats

• Average of 498 claims reported per year
• Average of 181 claims paid per year
• Average cost per claim: $65,755
• Average yearly cost of all family law claims: $11.9 million
• #4 claims area by count

Source: CNA Lawyers Professional Liability Claim Data 2007-2016

Top Causes of Family Law Claims

This chart represents the most common claim allegations against family law practitioners between 2007 and 2016. Disciplinary grievances are excluded from the data, which, if included, would represent more than one third of total reported incidents in the area of practice over that time.

Risk Management Tips

Screen New Clients

Be cautious when a prospective client has been represented by one or more prior attorneys for the same matter. Also be wary of a client who is overly concerned with fees or otherwise indicates an inability to pay. Most states do not permit contingency fees in domestic relations matters, but consider requiring a retainer up front to alleviate long-term financial stress.

Be Wary of Conflicts

Even where a divorce is uncontested, an attorney cannot ethically represent both parties. Less obvious conflicts involve the prior joint representation of both spouses in a substantially related matter (e.g. estate planning or real estate transaction). The practice of “conflicting out” potential attorneys- meeting with several attorneys solely to preempt their retention by the other spouse- can result in a disciplinary complaint if not properly recognized.

Manage Emotions and Expectations

Keep expectations realistic by having frequent discussions about the client’s goals and explaining all possible outcomes. In the interest of obtaining a favorable resolution and avoiding a disciplinary complaint, maintain integrity and civility with opposing counsel, notwithstanding client pressure to the contrary.

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Lawyers have to make decisions each day of their professional lives. Selecting their legal malpractice insurance is certainly one of the most important decisions an attorney will make. A law firm should do significant research before choosing which insurer to go with for their lawyers' malpractice insurance. At Paragon Underwriters, we have put together some helpful tips to consider before making that selection.

Look at the Forest for the Trees

Remember to look at the big picture rather than starting out by being overly specific with the details. Evaluate what the insurer is offering as well as whether you trust them. Think about the insurance agent’s past experience and reputation. The same is true of the insurer. Ideally, you'll want to stay with this insurer for a long time so consider whether you feel comfortable with the relationship at the outset.

Experience

As the famous football coach, Vince Lombardi, said, "Practice does not make perfect. Only perfect practice makes perfect." Look into how long the insurer has been in business and what type of experience they've had. Just because an insurer has been around forever doesn't tell you enough about their success, culture or how they treat their clients. You’ll also want to know if the insurance company insures many other law firms or if they are new to this type of exposure. Always elect an insurer who specializes in professional liability and has a large book of business – the larger programs offer premium stability, superior policy forms and many value-added benefits which firms can take advantage of.

Specialization

There are many insurance agents and brokers out there. There are, however, very few who specialize in legal malpractice and professional liability insurance. This highly specialized field has certain nuances that make it easy to miss key factors. Firms like Paragon Underwriters have been focused on professional liability insurance for attorneys and financial professionals for a very long time. We have made this our area of expertise and we are proud to be a part of the Michigan legal community.

The Financial Stability Factor

Will you be able to rest assured that you're covered? After all, you have a lot at stake with your law firm. It's more than simply a financial decision to make. Your reputation as an attorney and your firm's reputation is on the line. You need to be confident that your malpractice insurer has the ability to continue to pay claims into the future – when you may need them most.

With claims-made coverage business, there's an easy entry to market for new malpractice insurers. Therefore, many new insurers target specific markets to collect as much premium as possible, but they won't be around when the claims come in. You want to ensure there's a commitment on the part of the insurer to stick around when the worst happens and you need the claims to be paid.

What's the Insurer's Reasoning

Finally, make sure to research the insurer's claims philosophy. What type of consideration do they put forward to determine whether to pay a claim? Will they be the type of insurer to fight for every dollar or will they be willing to settle without a struggle?

At Paragon Underwriters, we want to see you succeed. We sincerely care about our clients and help steer them toward smart, financially prudent decision making. We believe the relationship between the insurance agent and the law firm is a very important factor in determining the best coverage and the best insurer to use. We will provide additional insight as to which insurer best fits your needs. We will begin to work with you early on in the process and ensure the policy you select is the right choice for your firm. That's why we're here... to serve you and to always have your best interests in mind. Call us today to start the process and we guarantee you'll be pleased with the experience.

At Paragon Underwriters, Inc., we know that a law firm’s commitment to proactive risk management coupled with sound business practices can lessen the likelihood that a lawyer will face a malpractice claim. It can also help mitigate potential losses should a lawyer be sued. Our Risk Management Program for CNA's Insured Lawyers is ideal for Michigan's law firms. Minimizing and managing an attorney's risk is essential. At Paragon Underwriters, we take great pride in putting together the best professional liability insurance coverage for our clients, but we also make it a part of our mission to teach (and preach) good risk management. One of the most important aspects of a responsible risk management program is for attorneys to bring their insurer into the claims process as early as possible – ideally as soon as a claim is noticed.

This practice is the most responsible action and can save a lot of money -- both the attorney and the law firm. When a lawyer contacts the insurer or agent as soon as trouble is brewing, it helps get everyone prepared to handle the situation.

Reporting a potential claim early enables the malpractice insurer to begin working on a resolution, which helps get the attorney and the firm back to business without any external hassles or distractions. The insurer may determine that it is appropriate to retain legal counsel to assist with a pre-claim situation. Other services may include grievance coverage, subpoena assistance, 24/7 risk management hotline, deductible reduction and oftentimes cyber liability coverage.

It is very important to remember that making certain actions without consultation with the insurer can result in a coverage denial. Examples of this include admitting liability, assuming damages, voluntarily making any payments, or incurring claims expenses. Such actions will likely violate policy conditions, which may result in a denial of coverage. Policyholders should not take action without first receiving guidance from their insurance agent or insurance company. Early reporting may trigger deductible reduction features and the attorney's policy may offer a feature which reduces the deductible if you report claims early or settle claims within a certain period of time (usually 12 months). This could reduce your deductible by as much as 50 percent.

Contacting your insurer or agent is a good way to avoid costly mistakes and problems. For example, misstatements on insurance applications may result in a higher premium or even the rescission of a policy based on wrong information. Call your underwriter or agent with questions about the application and the information requested. A phone call is an easy way to correct errors before they occur.

Do not hesitate to contact our professional liability team at Paragon to work with you in protecting your business. We make it our mission to help you manage the risk and avoid a catastrophic situation.

As an attorney, we know that you put your heart and soul into your law practice. You spend much time, energy and care in representing your clients. 99% of your clients are going to be grateful to you for your hard work and your dedication to them. However, there remains the 1% of clients who will turn around and sue and/or grieve their attorney. Sometimes this lawsuit or grievance is initiated several years following the conclusion of your work on their behalf.

Without sufficient professional liability insurance, all your hard work can quickly be for naught. Unfortunately, we have seen the horror stories of attorneys who work their entire career and then they're left unprotected when a client sues them for professional negligence or “malpractice”. Everything they worked for leading up to that point – their clients, their assets, their REPUTATION – are all in jeopardy.

Paragon’s clients know that they work too hard to risk throwing it all away when one client takes them to court for malpractice. It is essential to have the proper, paid-up professional liability insurance so that you are protected in the unfortunate situation when a distraught client tries to make you pay for their disappointment. The many clients who praise your devotion as an attorney won't mean anything when you lose everything. Call Paragon Underwriters today to discuss how we can help you be insured and protected in case of an unforeseen litigation by a current or former client. We put our decades of experience at work for you -- to protect you, your property, your people and your practice.

It's hard to believe that the year 2018 is almost over and planning for 2019 has already begun. Paragon Underwriters is a third generation business and has been serving attorneys for decades, but we still think of ourselves as a startup. The reason is that it keeps us thinking up new and fresh ways to innovate and improve. The insurance industry is constantly changing and we see it as our mission to keep ourselves a few steps ahead of the pace. As they say, "Be the lead dog or enjoy the view."

Our insurance products are constantly evolving to meet the needs of our clients. But as we constantly strive to improve your experience, the recent Thanksgiving holiday gave the team at Paragon a chance to step back, reflect and count our blessings. We are so very grateful to our clients, who have put their trust in us since we first opened our doors as an insurance agency in 1974 when my grandfather Alex Lipson launched our firm. Over the past 45 years, we’ve learned so much and met so many amazing people; we are enormously grateful for each and every one of you. During this holiday season, we wanted to take a moment to say "Thank You" for helping to make the past 45 years, and 2018 in particular, such a big success for Paragon Underwriters.

Insuring thousands of attorneys in Michigan and throughout the United States is something we take very seriously. The gratitude we receive when a client is protected from a malpractice lawsuit or attorney grievance is truly all the thanks we need. Insurance isn't an investment that lawyers want to make, but it's necessary to protect yourself in today’s legal environment. We know that there are choices your law firm has to make when it comes to professional liability insurance and we appreciate you choosing us.

During this winter holiday season, we give thanks to all the good we have in our lives. The Paragon Underwriters team is grateful for our company, but we recognize that there is so much more for which we must be thankful. We hope you can take some time for family and friends during the winter holiday season. Eat, drink, watch football and throw in some holiday shopping. Thank you all again. And from the Lipson family and the entire team at Paragon Underwriters, we wish you a joyous and blessed holiday season and a successful ending to 2018.

There's a longstanding history of professionals who think the worst could never happen to them. Unfortunately, this is why so many successful individuals fail to buy life insurance policies to protect their survivors after they die. Sadly, the same is often true when it comes to professional liability insurance. It's human nature to think that bad things won't happen to us.

If local Michigan attorneys needed any convincing evidence that they should obtain the best malpractice insurance available to them they should look no further than a recent case in Metro Detroit. A local man has successfully sued his Bloomfield Hills attorney for $13.1 million. As was quoted on the Channel 4 News, "When someone has a legal dispute, they usually hire a lawyer. But what happens when the dispute is with their lawyer or law firm?"

A Metro Detroit businessman went to court to sue his own attorney and wound up winning one of the largest payouts in such a case in Michigan history. The case had to do with an inventor who was due millions for his technology invention that all the computer companies were using. His lawyer advised him to hold out for more money (over $1 billion) and the client ultimately spent $1 million in legal fees for nothing. The client hired another attorney and successfully sued his former attorney for malpractice.

Many lawyers enjoy wonderful relationships with their clients and never imagine a client turning around and suing them for malpractice. However, this happens much more than you would think. A proper professional liability insurance policy is essential for all attorneys, regardless of your specialty. Contact the team at Paragon Underwriters today to re-enroll or learn about your options for malpractice insurance coverage. We put our decades of experience to work for you.