Fans of courtroom dramas would find the fast-paced world of lawyers’ professional liability insurance equally exciting. With 66% of lawyers in the US working for firms of five or less people, there’s an extraordinary amount of exposure to cover, according to one specialist broker.
“A lot of people say that a 400-man law firm is 400 times more exposed than a sole practitioner and I completely disagree,” said Scott Ammer, vice president of ECC Insurance Brokers and an Insurance Business top specialist broker for 2018.
“A sole practitioner is trying to operate a business, they’re trying to practice law and they’re trying to go out and get clients all at the same time. Should something pop up, whether it be a client slamming a door, saying ‘I’ll see you in court’ or maybe the sole practitioner only has two or three clients and they’re leaning on them to bend a rule. That sole practitioner is all of a sudden looking at bending a rule or losing a third of their book of business and that puts them in a rotten position.”
Ammer calls the smaller law firms ‘persona non grata’ in the industry. While some regional carriers are covering them, on a nationwide scope, he can count on one or two hands the number of carriers willing to write a sole practitioner anywhere in the US because they don’t have the same management procedures in place that a larger firm might have which protects them from risks they encounter during the course of their work.
The sole practitioners should be priced in the $7,000 to $8,000 range for a $1 million limit of liability, said Ammer.
“But you have the regional carriers, and the MGUs and MGAs that are saying, ‘no, a sole practitioner should be about $1,500,’ and when you look at carriers’ reports and the results on an annual basis, they’re getting absolutely killed on small law firms,” he explained.
Insurance professionals looking to follow in Ammer’s experienced footsteps and specialize in lawyers’ professional liability have a learning curve ahead, though not an insurmountable one.
“It’s not easy by any measure, but it’s such a small niche that if you can dedicate the time needed to get your arms around it, stay up to speed on the developments of legislation and how it affects the law firms, it’s a very good niche to be in,” he explained. “Usually, the first hour of my day is just going through blogs, going through Google and going through the news archives of the previous day with regards to developments in the industry.”
Insurance Business caught him in the middle of reading a Colorado Supreme Court summary on a ruling stating that beneficiaries of wills, trusts, and estates are not allowed to sue lawyers that drafted the estate, a piece of news Ammer learned about only two days before during a conference call.
“When you look at that from an underwriting perspective, that removes about 70% of the exposure to underwriters and to carriers,” he said. “That little nugget now with the knowledge behind it is allowing me to present the firm that I’m trying to write in a much more favorable light, and even the underwriters were unaware of that development.”
One of his secrets is to set up Google Alerts for his top 20 clients so that every time they’re mentioned in the news, he gets an email that he can then send to retailers who can then pass it along to clients, which makes them look more engaged.
ECC also has a broker-in-training program that coaches new hires on every aspect of the business during an 18- to 24-month period and sets them up for success in the industry, demonstrating ECC’s emphasis on mentorship.
“It’s about the team,” said Ammer, “it’s not about the individual.”