Timely Reporting Of Potential Legal Malpractice Claims Is So Important

Timely Reporting Of Potential Legal Malpractice Claims Is So Important

Your ALPS policy is a “Claims Made and Reported” insurance policy. What does that mean? It means that as a condition precedent to ALPS’ obligation to defend or indemnify you, you must immediately report any claim, or something that could reasonably be expected to be the basis of a claim, to ALPS during your current policy period (or extended reported period). Stated differently, if you receive a claim or become aware of a potential claim and do not immediately report it to ALPS then you run the risk of ALPS declining to defend or indemnify you.

ALPS defines a “claim” as a demand for money or services, which in most cases is self-explanatory. If you are served with a lawsuit, for example, there is no question –  that qualifies as a claim and needs to be immediately reported to ALPS. But what about situations where you make a mistake or the client is unhappy with a decision you made or maybe he or she is simply unhappy with the outcome of a trial or a court ruling. Does that need to be immediately reported as well?  Maybe.

To answer that question, it is first important to recognize that every single lawyer will make a mistake in his or her career and every single lawyer will have an unhappy client at some point. But not every mistake will lead to a claim.  Likewise, not every unhappy client will lead to a claim. Reporting is akin to “issue spotting” on a bar exam.  Do not consider whether you believe there is any merit to a situation or not.  The reporting requirement is not limited to meritorious claims. Do not rely on efforts that you believe may correct the situation in the future because if those efforts fail, you will be late.  You will be judged by a reasonable attorney standard under the facts present at the time you became aware of those facts.  So when to report? Unfortunately, there is no clear answer to that question because each circumstance is different. But to assist with that decision making process it is first important to realize that there is no negative consequence to reporting potential claims. On the other hand, the consequences of not immediately reporting a potential claim can be dire. It should go without saying that the only thing worse than having a malpractice claim is having your insurance carrier tell you that a claim is not covered because it was not timely reported.

Again, this is not to say that every unhappy client or minor mistake needs to be reported, it has to be something that a reasonable person would expect to be the basis of a claim. If in doubt, call ALPS and discuss the situation with a Claims Attorney. Often times I find that if a lawyer is debating whether or not to report something to ALPS then he or she should report it because it is simply not worth the risk of not having coverage.

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John Ries is a graduate of the University of Montana School of Law and Northwestern School of Law at Lewis & Clark College. John has been a Claims Attorney for ALPS since 2009. Prior to coming to ALPS, John served as a Deputy District Attorney for Union County, Oregon, and an Associate Attorney at Stamper Rubens, PS, in Spokane, Washington.