ALPS In Brief — Episode 50: Desperate Times Call For Desperate Measures

Over the 3 years following this global recession spurred by COVID-19, we’ll see a spike in bankruptcies, business dealings gone south, divorces, and all kinds of other unfortunate situations that may result in lawsuits. Those parties may turn around to blame their lawyers. Plus, lawyers and their staff are more likely to make mistakes right now in these high stress times. So, how do we brace for impact? Communication and kindness may be the best medicine. ALPS Underwriting Manager Leah Gooley and Mark Bassingthwaighte discuss their concerns, thoughts, and practice tips to help you prepare for the post-COVID economy.

Transcript: 

MARK BASSINGTHWAIGHTE:

Hello, I’m Mark Bassingthwaighte, the risk manager here at ALPS, and welcome to the latest episode of ALPS In Brief, the podcast that comes to you from the historic Florence building in beautiful downtown Missoula, Montana. Once again, I’m so delighted to have as my guest, Leah Gooley, who is the underwriting manager. I don’t know if all of you know this, Leah is in Missoula, in the beautiful historic building, and I telecommute. I’ve been telecommuting for many years over in Billings, so maybe I should ask real quickly, are we still having a beautiful day in beautiful downtown Missoula, Montana? We’re getting into August here, but I could see a little light coming in.

LEAH GOOLEY:

It’s beautiful and sunny, a little cloudy, but I’ll take that over the snow that we know is coming.

MARK:

Yeah. Absolutely. Absolutely. I really wanted to have Leah join me for a conversation. I’ll be honest and say, and I don’t know about you, Leah, and I suspect many of our listeners might feel similar to what I’m about to say, but I am tired of COVID-19 news.

LEAH:

Amen.

MARK:

It’s just, but COVID-19, and what has happened in terms of not just a legal profession, but to everybody, has changed some things. We were talking prior to going into this, in terms of internal to ALPS, some general concerns looking at virtual practice firms and trying to just work through, do they represent unique interests? Is there something different? We’ve been having some interesting discussions about that, and then COVID-19. Boy, now teams, like everybody we insure, is a virtual firm and I thought it’d be fun to do just sit down and share some of our thoughts, concerns, and even some practice tips.

MARK:

That’s what we’re going to do, folks. We’re going to start out just trying to identify some of the concerns that we see in general. Leah, perhaps I’ll jump in here and start this, but feel free to come in at any point. Really, I think it’s becoming quite clear, not just here in the United States, but globally, we are in a recession. Who knows how this is going to continue to evolve, but that’s important because if you look historically at the numbers, claims are going to spike for about three years post-recession, in terms of legal malpractice claims. And then, they’ll start to return slowly to normal, about five years out. We are anticipating not just here at ALPS, but within the industry that there’s going to be a spike in claims.

MARK:

I would anticipate, too, that we’re going to see a spike in severity. Some things to be concerned about, and we’re going to try to visit why, but I think my initial thoughts is to what drives some of this, you think about business dealings and bankruptcies and divorces and all kinds, but when business dealings, in particular, go south and look at all the companies suing their insurers for the business interruption coverage that on most of these policies isn’t there, desperate times call for desperate measures. They’re going to turn into and try to blame lawyers and some of these claims, if nothing else, all the care’s going to be involved in trying to defend these where we are contractually obligated to. I think that’s almost a given, lawyers and staff are going to make mistakes in high-stress times.

MARK:

Boy, are we in a high-stress time? This rapid move to cloud computing to telecommuting from home, policies and procedures have changed, maybe not completely thought through. It was a very rapid adjustment, so I think there’s going to be just normal missteps that occur. In addition, I think just again, the stress itself we’re all under. I’m surprised, I would guess this is true for you, Leah, in terms of your own neighborhood, but we have a number of people in the neighborhood that I truly, I mean, not trying to overstate it, are almost in a daily state of panic, out of fear of what could happen, not wanting to catch the virus and things, and when so much of our energy is being devoted to just trying to go to the grocery store without exposing ourselves, I think that’s a concern.

MARK:

At the same time, your clients are under the same stresses, the same thing. Are they going to question their own decisions down the road? Why didn’t you prevent me from doing this stupid thing that I did? There’s a lot of stuff going on here. I’m also going to talk about the closures of courthouses and all the changes in just the local rules, court rules, procedures, filing deadlines, being extended. There’s just so many things up in the air, very difficult to stay on top of. Finally, another thought I have is, I had a call this morning from another lawyer on the East coast, sharing some concerns along these lines. Basically it’s, “I’m owed a lot of money, but they don’t have, everybody’s been furloughed that they can’t pay it.” Here’s another conundrum, how aggressive do you get with collection actions? Do you even try, because we all know particularly fee suits, bringing about often malpractice, counterclaims and whatnot? There’s just a couple of thoughts of mine, just right off the top of my head coming into this, so that’s your risk manager’s response. How about an underwriter’s response? What kind of concerns do you have?

LEAH:

Along those same lines, we tend to see, like you had mentioned, claims starting to spike about three years into the process. This pandemic is new. It’s a culmination of a lot of different stressors for both working from home, adjusting quickly, which frankly, the law profession has trouble doing because they’re meaty and it’s a very weighty, important system of ours. And so, having to make this quick transition, both through the courts and individual law firms, and then like you had mentioned, customers and clients trying to adapt to those changes as well, while balancing working from home, their kids, and trying to manage their businesses under stressful time. We do anticipate certain trends within certain areas of practice. You can imagine divorces may be on the rise as well as marriages, like you said, and then, folks looking back. Overall from an underwriting perspective, trying to see where you sit individually, where your area of specialty lies, and sticking to that area of specialty, knowing how some of those changes come about, and how you can adapt to that in this pandemic. That’s a really important aspect to all of this.

MARK:

Yeah. One of the things I think is worth noting for our listeners, I brought up this whole point of, we can anticipate due to stress, financial stress, fear, all of the things going on, that missteps will occur as a result. I can share, and I would assume you may have had one or two more conversations than me, but our claims attorneys are already seeing claims that are missteps that occurred post this work-from-home transition. We are already seeing these types of claims start to come in, not unexpected.

MARK:

Let me jump. I think we’ve set the stage reasonably well, but what’s more interesting to me, and I would anticipate our listeners is, these virtual practice/work-from-home risks that we see, what are your thoughts in terms of trying to manage that? Maybe come at it from a concern and a management piece. I could anticipate for instance, because I know we’ve talked about this in the past, but supervision. What’s your concern with supervision and what are your thoughts about if I’m a law firm wanting to be insured? What can I share? What helps ease your mind? You see where I’m going? How can I present as a good risk in light of this change?

LEAH:

Yeah, that is a great question. Supervision amongst law firms has always been a hot topic for underwriters. This isn’t a new issue, but it’s certainly more prevalent now that COVID has moved more folks to working from home. Supervision in general, it’s just knowing what you, your partners, your associates, your employees are doing on a daily basis, and understanding that if there are questions, if you’re a collaborative law firm, that you have the ability to reach out and talk through those issues and not feel like you’re on an island, like you need to make a decision in isolation, and so, that expressing how you typically manage either those daily conversations, you manage the big picture conversations that happen for your firm. That kind of thing is interesting for the underwriter and important, I think, for us to understand that you are cognizant of your risks in the firm that way.

MARK:

Am I incorrect in what I hear you saying, at least to some degree here, is are we really talking a little bit about wellness, checking in and trying to keep people connected? Is that where you’re focusing with this checking in daily or it’s a procedural thing? Maybe it’s both, I don’t know.

LEAH:

Yeah. Yeah. I would see it as both, kind of two prongs your wellness, and that’s a great point to bring up., That there’s the wellness for individual attorneys really is just keeping everybody connected and engaged and it has to become more of a top of mind activity amongst the firm. The other side of that is the supervision and making sure that the work product itself is available for conversation. Perhaps you set up Zoom office hours, if you and your staff are spread across, so that they know a specific time that they can get ahold of you, or you have with your team a specific daily meeting time that you’re going to check in and answer questions, or even just engage in that office chit chat that you normally don’t get to when everybody’s working from home. We miss that.

MARK:

Yeah. Yeah. I love that you brought that up because I have been, as you know, telecommuting. I’m 300 and what, 50 miles away from the mothership here, and longterm telecommuting can work some people and for others, it really doesn’t. I think one of the reasons that it doesn’t is this connection piece, the water cooler conversation, or sharing a cup of coffee in a break room or those kinds of things. That was a hard transition for me. What was so interesting, the shift to work-from-home in my world, in terms of just me personally, was a nonevent. I’m already there, but the company’s response was night and day game changer for myself and a few others that have been longterm remote employees, because we are now far more engaged.

MARK:

You and I are having this discussion. Everybody hears the audio, but we’re watching each other. We’re on Microsoft Teams. That we have used, I think, as a company in a very effective way, to maintain engagement amongst the Alps community in terms of the workforce. As a risk manager, I absolutely agree with you. I think supervision is important from this connectivity piece, this wellness piece. And, might I add, the challenge with this supervision wellness angle is that when we aren’t together day to day, it’s a little more difficult to really, unless we’re using video and having some regular conversations to understand, if you and I share office space, you’re going to pick up that I’m depressed or that I’m struggling in person much more quickly and more easily. And so, I think it’s important if this work-from-home goes longterm and maybe permanent for some, we need to keep these issues in mind.

MARK:

I now switch back. In terms of process, I described this as the accountability problem, and I just invite lawyers, from administrators and those in charge in terms of internal processes, do you need to review and perhaps even redesign what you’re doing? We had a situation I learned about where everybody left, worked from home at a law firm, but FedEx was still coming, and so, what they did is put a cardboard box outside a locked front door and a sign, ‘FedEx drop and pick up from here’ and a little arrow. There are envelopes in here for FedEx to pick up. Now you know there are confidential information in there. You just sit here and go, what are you thinking? I get the panic that that might need to happen for a day or so. That’s what the best idea. I’d like to see something else, but that cannot be permanent.

MARK:

I invite folks that are listening again, to think about your calendaring process, the mail process, client communication, file documentation. Are we really keeping all of our files current? Are we maintaining client competences? For instance, fold this over into a professionalism piece, but you have to have a workspace that the kids aren’t running back and forth in the background in the PJs and having a water balloon fight while you’re trying to meet with your client. That just can’t happen. It’s a professionalism issue, but it’s also, they can’t and should never have access to the home computer that you’re using for work, those kinds of things. There’s some thoughts on trying to manage some of this. Do you have other things that you’d like to add to this one?

LEAH:

Well, let’s talk about what you had said, reinvisioning what your processes are. As you look at that, you’ve moved as a firm, say to a part-time work-from-home, due to COVID. Maybe you want to continue that, maybe that makes sense for your firm. And so, it’s a good opportunity for you to look at what new technology is out there, what new opportunities you have to create efficiency for your law firm to meet your client’s needs. And then, also just making sure as you make those shifts, that that tech technology training takes place, that people are really comfortable with it. Again, circling back to the wellness. Are you able to use it and actually see each other on Teams and have those connections and feel comfortable in a client meeting to be able to communicate what you need to communicate to them? Keeping top of mind on all the new stuff coming out, just rolling out, based on COVID. There’s so many new opportunities every day.

MARK:

Yeah. Yeah. There really are. I’ve got to do a jump shift here. You know me, I go off on these tangents at times. I love the comment about, again, looking at processes, but also reviewing and trying to understand the technology. More and more I’ve been talking about, lawyers are to understand the benefits and risks associated with relevant technology. We’re always very good about the benefits, risks aren’t so as obvious, and you really need to take some time. It’s just by way of example, and it’s just trying to underscore the importance of reviewing your processes and really looking at everything. Let’s say you and our adverse attorneys representing adverse parties, and we’re in a meeting and we’re all talking, I set this up, I can control whether people are recording this from the platform, but people can also just put up their phone and record. I can’t do everything to prevent things from being recorded.

MARK:

It’s just one crazy example of, we need to think through the ramifications of what we’re doing and the technology, how we’re using it. Hear me clearly. There’s absolutely nothing wrong and it’s not incompetent or anything to use Zoom or Teams, but we have to understand the benefits and the risks and address them. Same might be with a collaborative calendar thing that’s out on the web. It’s about just trying to maintain client confidences and maintaining the privacy of the data and whatnot.

MARK:

I’d like to take a moment and share a couple of specific risk management tips that are important to me. If you have other tips to add here, please, please, again, jump in.

MARK:

I want to share just, again, some obvious things that come to my mind from a risk perspective. This hopefully goes without saying, but I think we see this all the time. COVID in situations like this, in terms of recessions and whatnot, you’re going to see this type of claim go up, and it’s really dabbling. Please don’t dabble or do a quick jump shift, do a new practice area. I have spoken with attorneys that are very intentionally moving right now and very aggressively, into the bankruptcy space, for obvious reasons. Some are doing this, again, it’s a jump shift, and know absolutely nothing about it, or very, very little and others are very, very intentional about it and really taking their time and developing processes and procedures, getting mentors, and really coming up to speed in a very appropriate way. So, caution, jump shifts, dabbling very dangerous.

LEAH:

Mark, I’ll comment on that.

MARK:

Please.

LEAH:

That is an area that we see so many claims come out of competent, smart attorneys who just have taken a case or taken on an area of practice that they don’t get the full spectrum of it. It’s definitely ripe for either missteps and just missing something because it’s a nuance to that practice. I absolutely agree with you on that.

MARK:

It’s one of those things. We just don’t know what we don’t know, and that’s the problem on the dabble. I also would strongly encourage you, more than ever, to determine upfront if clients can afford your services and also thoroughly document your scope, because more and more, it’s not face-to-face in the same room having conversations. We need to be clear. If I’m interviewing you and you’re interviewing me in terms of price, a potential client, and I’m potential lawyer here, we really to understand. Leah, can you afford this? It’s not a discussion over my hourly rate. Here’s what this divorce might cost or what this bankruptcy might cost, and these are some variables, and I’ll give you the best effort that I can to give you some accurate parameters, but then this is what I’m going to do and what I’m not going to do.

MARK:

I think now more than ever, these are key, key things to do. Again, I brought this up at the very beginning, I would not get aggressive in collection practices right now. Maybe to really underscore this, a lot of lawyers will say, “I did good work, got a good outcome, I deserve to be paid now more than ever.” I don’t care. It’s completely irrelevant. That’s a given, let it go. The only issue is, is there any money out there to get? A harsh reality is, a lot of these people with furloughs and everything else, there is no money. They’re not paying the rent. You think you as the lawyer are first in line? That ain’t happening. It’s roof and food for the kids. They’re a top priority right now. I would not get aggressive with collection actions.

MARK:

I’m not saying walk away. I’m just saying let’s be reasonable about, because you can put people in a corner, and then the counterclaim is coming. Of course, make sure that everybody’s aware of changes in relevant rules, regulations, and laws, so that we don’t blow some filing deadlines just because we’re out of the loop. I would also add that clients should be made aware of changes that might impact their matter. So don’t overlook keeping clients informed, but because it’s their matter.

LEAH:

What a great idea.

MARK:

You need to allow them to meaningfully participate, that kind of thing. There are some risk tips that I have. Do you have anything that comes to mind from your end that you would want to add or think about?

LEAH:

Yeah. Just drafting off what you just said, basically, considering those kind of client needs and taking those steps to make sure that they’re met, being clear about what response times need to be now that people are maybe working different hours as they’re virtual or working from home, a little more flexibility, whether folks want virtual meetings or in person, and how to manage those risks, specifically, just being open and up front about what your clients need. The other big thing, it’s not new that attorneys take their work home. That’s definitely not a new phenomenon, but with some of these more flexible arrangements, just being clear about securing client information that you bring back and forth, even laptops and hardware, software issues that you might have, being just top of mind on that stuff.

MARK:

Well, and I appreciate that. Let’s look at that a little more in depth. What we’re really getting into is just cybersecurity, cyber liability, that whole issue. Let me share, well, before I do, do you have, again, from an underwriting perspective, are there, because we also sell cyber liability insurance to lawyers …

LEAH:

We do.

MARK:

Are there risks? Does this situation, in terms of COVID, work-from-home, virtual law, all this stuff, does that change your risk analysis at all? Do you have any concerns that come up?

LEAH:

Well, certainly one of the big ones is that the home systems just are not as secure as often office situations are, when it comes to hardware routers, all of those setups, personal devices, like your cell phone, just may need to be reexamined. We had talked before about looking at your internal processes, and it’s a good time to look again at your cyber processes as well.

MARK:

Yeah, yeah. Understand folks, there is a difference between trying to secure systems and protecting and maintaining data. Those are actually two different things. There’s a lot of overlap, but not entirely. I’m going to come back to this here in a minute, but you talked about home systems, and just to underscore that point, can I share to our listening audience, home routers, as an example, often they are older devices. They have not ever been appropriately set up, meaning the default password hasn’t been changed. You can get these default passwords off the routers in seconds off Google. You just figure out what kind of router it is. It’s typically ‘admin’ or some silly thing like that, encryption hasn’t been turned on, et cetera, and cybercriminals know this, and they are taking real advantage of this.

MARK:

We need to think through, we typically don’t have IT support dealing with our home systems, but now that the home systems are the primary system, we need to think through this and make sure that the steps that we’ve taken to secure the perimeter of the work environment, of the office network, et cetera, now extends to the home environment. That security piece needs to be in play, but that’s not enough. Getting back to privacy of data, how many of us routinely at home, work with shared devices? My wife and I each have our own phone, but we use each other’s phones at times. If we’re out, “Here, can you just do that?” We share home computers and it’s kids having to do homework, maybe need to get on Dad’s computer or Mom’s computer.

MARK:

What have you done to protect client confidences? In a perfect world, no family member, unless they are employed by the firm, should have access to any of this equipment period. It just really shouldn’t happen. So, think about personal use and who’s using all of this to try to maintain. One of the things that I’d like to talk about, too, that I think a lot of lawyers don’t understand, let me ask you this. I hopefully I’m not putting you on the spot here, Leah. My guess is not. If I’m a law firm and I go out and this is not going to be unique to Alps, I’m just going to use Alps as an example. I go out and I buy this cyber liability policy for my firm from Alps, does that insurance cover all these devices that people have in their homes that are using personally for work? Does that coverage extend?

LEAH:

Such a great point. Such a great question. That’s dialing down. Do you know what your policy covers? Have you read what the policy language specifies? Typically there’s going to be carve-outs for personal devices, because they’re better covered somewhere else. There could be certain requirements. One of the big ones is out-of-band communication when it comes to wire transfers. You’re required to double check, pick up that phone and call whoever it is that told you to wire the money to a certain area. You have some of that responsibility, and that’s an important to know that on the front end. Absolutely. What a great question.

MARK:

Yeah, yeah. Yeah. So folks, I don’t want to put anybody here in this extreme panic. Policy language is going to differ, but generally, these policies cover equipment that is either owned by or leased for law firm purposes. That is not what a home laptop is, or the home cell phone, or the home iPad, and all these other things. Now, if a personal device was the pathway perhaps into the network and the firm’s network is breached and something happens, every carrier, these policies, there’s a lot of the tail to them, but I have trouble seeing how an insurer wouldn’t be stepping up for that one. The real concern is if the attack is limited to, and this is happening, which is why I’m having this conversation, to the home systems, so if I’m a hacker and I break in, Leah, to you as an attorney at a firm, into your home laptop, and I steal everything. I don’t need the network anymore.

MARK:

You’ve got all this stuff on your laptop, and-

LEAH:

What a great opportunity.

MARK:

-and then, you turn around and say, “Well, I have cyber coverage for this.” No, you don’t. The firm has cyber coverage for firm equipment. This isn’t firm equipment. It’s just something to think about, just to be aware of. It gets back to thinking through your practices and procedures and your processes in light of these changes, so I would obviously encourage IT support to address any concerns. And even just said, talk to your IT support person. “Here’s what’s going on in various homes. What do you think we should do? What are your concerns? Can you help us?” Just take it a step at a time. Other thoughts, other concerns that you have here, I don’t want to take up too much of your precious time, but …

LEAH:

Well, I think these are excellent, excellent tips that you’ve brought up, and a lot of really thought-provoking information for firms and attorneys to mull over, especially if folks are considering doing more of a longterm flexible work-from-home situation. Yeah.

MARK:

Yeah. Can I end with this? If firms are going to think about really extending at least a part of the workforce perhaps, more of a full time work-from-home remote, which in my mind is a little bit different than a virtual practice, but I think from a risk perspective, really not a whole lot. Initially, is just the fact that we have work-from-home folks now, is that an “Uh oh,” for an underwriter in terms of just that fact?

LEAH:

That’s a great question. No, if you have a virtual practice or somewhere in that spectrum, from virtual practice down to a flexible working from home environment, again, it’s not something necessarily that is new to the industry. It’s just more prevalent now with firms. And so, knowing that the attorneys are looking out for some of these pitfalls, cognizant of what they need to do to mitigate, that’s really the important stuff that underwriters want to know.

MARK:

Yeah. Yeah. Yeah. I think that’s important for folks to hear. It’s a great place to end on, because in my mind, there’s nothing wrong with work-from-home. It’s not the tool, it’s what do we do with this situation we find ourselves in.

LEAH:

Exactly.

MARK:

If we were really concerned about all these changes, we wouldn’t want to insure new young lawyers that just hang up a shingle, because they don’t know what they’re doing. You see where I’m going? You don’t have 10 years experience to be this computer geek, have this high tech system at home. The insurance industry, we are comfortable with the change.

LEAH:

You bet.

MARK:

What becomes important is, how do you respond to the change? Are you responsible in managing these transitions, and then following through and adjusting ordering processes? If you’re thinking long term of staying in this space in full or in part, I really encourage all of you folks to take some of the things that we’ve raised here to heart. I’ve been telecommuting for 10 years. I love it. I won’t ever go back. I’m assuming Alps will allow me that, extend that privilege, that I could stay out here, but it’s not the work-from-home environment that’s a concern. It’s how we are all responding and dealing with the work-from-home. So, that’s my final word. Leah, do you have any other closing comment or anything else?

LEAH:

Well, I appreciate some of these concrete tips. I can see how they’d be so helpful to take advantage of, and just circling back to the root of all of this is the wellness, and making sure that you have what you need as the attorney and the connections that you need within your firm and your clients. What a great top priority to have.

MARK:

Yeah, yeah, yeah. Absolutely agree. Well, Leah, thank you so much for spending a little time with me and the audience today. I hope you’ve had some fun. Look forward to doing this again. We periodically get together.

LEAH:

Absolutely.

MARK:

It’ll be awesome. I look forward to the next one. Before I sign off, I do want to update anyone that has listened to an earlier podcast called Listening to Your Life. It’s a little bit of a story, of a challenge my wife gave me, and just share some thoughts about what was happening. Basically, I’ve been doing a lot of bike riding, and there was a challenge to ride 1,200 miles by the end of summer, which is defined as the end of September. It’s all started at the beginning of the COVID stay-at-home situation here in Montana. But, as of today, which is what, the 12th of August, I’m at 1,421.

LEAH:

Whoa!

MARK:

I am rocking it and I’ve upped my goal. Now I’m going to try to hit 1,750 by the end of August or September. It’s been a lot of riding, a lot of fun. As we near the end, or shortly after the end of this, I’m going to come back and do another little podcast on Listening to Your Life and some learning to the whole process. But for those of you that are monitoring all of this 1,421 as of today, it’s a lot of miles, but it’s been a great experience. So, I will say goodbye to all of you. If you have any thoughts, concerns, issues you’d like to discuss in future, or perhaps you’re in a podcast, don’t hesitate to reach out to me at mbass@alpsinsurance.com. Happy to try to help in any way that I can. Thanks again, folks. Thanks, Leah. Goodbye.

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