While most of the attention on the malpractice insurance crisis in Mississippi has been focused on physicians, a new wrinkle has evolved: lawyers are beginning to have trouble finding adequate and affordable professional liability coverage.
According to the Institute of Management & Administration (IOMA), it’s not unusual for midsize law firms to pay at least $5,000 to $8,000 per lawyer for professional liability coverage.
The Insurance Journal reported that most law firms could expect a minimum increase in professional liability coverage of 25% to 40%, and a much higher percentage for firms with claim histories and high-risk areas of practice such as personal injury, where a plaintiff lawyer may fail to file a lawsuit within the statute of limitations, and real estate law, where a real estate attorney may mistakenly tell his client that the title to the house he is buying is good when there is a judgment against the seller.
Who’s suing lawyers? Unhappy clients and other lawyers. IOMA reported that some 10% of all malpractice claims are counterclaims to suits for fees, and about half of all suits for fees initiate malpractice counterclaims.
Jane Nosbisbh, staff counsel for the standing committee on lawyer’s professional liability for the American Bar Association (ABA), said there is no connection between the issue of rising premiums and an increase in lawsuits.
“The discussion of increases in premium costs has much more to do with the overall insurance industry,” she said. “In terms of the increase of premium rates, it depends on the areas of practice of specific attorneys and the geographical location of the practice because some areas of the country are just more litigious than others.”
Nosbisbh also said she had no access to information that frequency or severity of malpractice suits against attorneys is on the rise.
According to a study released by the same ABA committee, “Profile of Legal Malpractice Claims: 1996-1999,” claims against lawyers “appear to mirror the economy. Insurers can expect to see an increase in both the frequency and severity of claims against lawyers in the years following an economic downturn.”
Bill Mathison, executive vice president of Fox-Everett Insurance in Jackson, which has provided professional liability coverage to attorneys since the early 1970s and was the endorsed provider of The Mississippi Bar until a few months ago, said the ABA “is incorrect to blame it all on insurance companies.”
“It’s easy to sit around and cuss insurance companies,” said Jimmy Heidelberg, chairman of the insurance committee of The Mississippi Bar and partner with Colingo Williams Heidelberg Steinberger & McElhaney, P.A., in Pascagoula. “They are in business to make a profit. You can’t expect a company to take in $1 million and pay out $2 million and stay in business. We need them more than they need us.”
When Doctors Insurance Reciprocal (DIR), a subsidiary of Reciprocal of America, went into liquidation, 535 Mississippi doctors were left without medical malpractice insurance. Mississippi lawyers with professional liability coverage through The Mississippi Bar-endorsed program, ANLIR (Attorneys National Lawyers Insurance Reciprocal), also a subsidiary of Reciprocal of America, also found themselves without coverage after the parent company failed.
“ANLIR’s book of business was profitable … but Reciprocal of America ran into such financial difficulty that they were unable to reinsure their losses adequately and that is the reason the companies were basically put into liquidation,” said Heidelberg.
According to a recent survey, about two-thirds of Mississippi lawyers have professional liability insurance coverage, said Larry Houchins, executive director of The Mississippi Bar.
If the problem of finding affordable, if available, professional liability insurance coverage grows to a crisis situation like medical malpractice, would the legal community consider asking the Legislature for caps or some form of relief?
“It may be on the horizon,” said Heidelberg, and then added that tort reform “is a sledge hammer approach when you need a scalpel. The best solution is good, honest, fair and reasonable judges who deal with this on a case by case basis to make sure the law is followed and justice is done.”
Contact MBJ contributing writer Lynne W. Jeter at firstname.lastname@example.org.