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The perfume of the premium must overcome the stench of the risk

As an LPLI policyholder, you may wonder exactly what an underwriter does. The basic purpose of underwriting is to evaluate risk, decide whether that risk will be accepted and determine an appropriate premium to cover that risk.

A quote that has been floating around the world of underwriters for a long time is “The perfume of the premium must overcome the stench of the risk.” It is our attempt at humor. However, when it comes to your firm, everyone can help decrease the cost of the “perfume” in the following ways:
  • Have the firm’s individual attorneys complete three hours of continuing legal education in the areas of ethics, risk management, loss prevention and/or office management. This will automatically qualify for a 10% credit applied to the premium of each attorney.
  • The firm can participate in a voluntary in-house risk management visit. Once the firm releases the report along with the firm’s response to underwriting, a credit will be applied for three years should the firm remain claims free.
  • Employ an experienced full-time office manager/administrator to ensure good office procedures are implemented and used throughout the firm (i.e. a written conflict avoidance process).
  • Review the docket control system and procedure. The underwriter is looking for a computerized system that requires two independent date controls, produces a weekly calendar and requires that the attorney assigned to the case be responsible for docketing.
  • Require the consistent use of engagement, disengagement and declination letters.
  • In an office sharing situation, make sure there is an indication of separation between the firms, a written office sharing agreement and require proof of professional liability insurance from the other firm(s).
  • In the case of a solo practitioner, have a designated back-up attorney to handle cases in your absence.
  • Review and update the firm’s website whenever there is a change within the firm. Be sure the home page includes an appropriate disclaimer that an attorney-client relationship cannot be created by visiting the site.
  • When submitting the application, include a cover letter with details of the outstanding features of your law firm.
All of the information listed above will have a positive impact on an underwriter when assessing risk and charging appropriate premium. Let's face it. We all prefer perfume over the alternative.

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