Non-Profits at Risk: Unprepared and Underinsured

A recent study suggests that the non-profit sector is generally underinsured and unprepared for liability risks.  In its Nonprofit Risk Survey, available here an international risk advisor concluded that nonprofits are not allocating enough dollars to properly protect against risk.  Far too many non-profits have not completed an independent risk assessment meaning that they are unaware of their vulnerabilities.  Since many non-profits surveyed are purchasing the bare minimum coverage, this is a recipe for disaster.

Reportedly, non-profits are particularly susceptible to media liability, network …

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Anatomy of a Ponzi Scheme in a Post-Madoff World

The Ponzi scheme expired with the arrest of Bernie Madoff, right? Absolutely not. Ponzi schemes are alive and well.  Many of these scams are reported but presumably many go unnoticed as criminals target the unsuspecting of millions.  Apparently, Madoff’s 2008 arrest did little to dissuade others from engaging in similar crimes, although on a lesser scale. According to the SEC, which compiles Ponzi scheme data, these crimes continue at a disheartening rate. 

A Ponzi scheme is an investment fraud that involves the payment of …

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Alleged Conflict of Interest Leads to Malpractice Suit

A prestigious and well regarded Philadelphia based law firm was recently named in a multi-million dollar malpractice lawsuit arising from an alleged conflict of interest. The plaintiff alleges that the firm’s relationship with her ex-husband’s employer resulted in a less than favorable outcome in her divorce proceedings.  In 2009, the plaintiff wife retained the law firm’s matrimonial group to represent her in divorcing her husband who held a high position at Morgan Stanley. While the divorce case was proceeding, the law firm was retained …

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Insurers’ Communications Protected by Attorney-Client Privilege

A recent decision provides insight on the application of the attorney-client privilege to communications between an insurance professional, who was also an attorney, and the insured. Generally, all claims are assigned to an insurance professional to monitor and, if applicable, to strategize with insurance-appointed counsel.  It is widely accepted that communications between defense counsel, the insurer, and the insured are protected by the attorney-client privilege pursuant to the so-called tripartite relationship.  However, there is no privilege that applies to communications only between insurer and insured. …

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Collection Proceedings against Clients Often = Malpractice

Ever hear the cruel joke about a thankless client who achieves a wonderful settlement through her attorney’s legal prowess only to terminate the lawyer before the settlement ink is dry? Well, for some unfortunate attorneys it’s a reality. Attorneys in this pickle face the unenviable decision of whether to initiate a collection action against the former client to collect on unpaid legal bills or to sue under a quantum meruit theory. Reportedly, however, fee disputes are at the heart of a significant percentage of …

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Failure to Disclose Jeopardizes Coverage in Hefty Malpractice Claim

A law firm’s failure to disclose a potential claim on its insurance application may act as a waiver of coverage.  Lloyd’s of London recently argued that coverage did not apply to a California based law firm in a multi-million dollar legal malpractice action.  According to Lloyd’s, the professional liability insurance policy contained an exclusion for claims the firm knew or reasonably should have known about prior to the effective date of the policy.  At the time the law firm procured the policy, an attorney from …

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Insurance Implications in the West, Texas Explosion

One million dollars of coverage for $100 million in losses?  Unfortunately, that appears to be the case for the West, Texas fertilizer plant that recently exploded.  Reportedly the owners of West Fertilizer Co. hold a negligible amount of insurance compared to the estimated cost of the damage caused by the blast.  The plant did not hold excess or umbrella insurance policies.  The fact that the company’s owner has not breached any applicable regulation has been the subject of heated debate on the national level regarding …

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Former New Jersey Governor Sued for “Grossly Negligent” Conduct

Former New Jersey Governor Jon Corzine and other executives from MF Global were recently sued over the 2011 collapse of the commodity trading firm.  In the suit, the bankruptcy trustee claims Corzine and others caused the firm to fail through a risky trading strategy and “grossly negligent” oversight. Corzine allegedly was aware that the trades were high risk, but failed to implement proper policies to protect the firm.  In particular, the lawsuit contends Corzine breached his duties to the shareholders of MF Global and failed …

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Lawsuits Targeting America’s Wealthiest

A high percentage of the wealthiest Americans believe that they are more likely to be the subject of a lawsuit today than they were before the financial crisis.  The issue of disparity of wealth, income and taxation has intensified these fears that their wealth can attract lawsuits.  These concerns are reportedly legitimate, because under the widely accepted doctrine of joint and several liability, if more than one defendant is responsible for a plaintiff’s injury, any of the defendants may be held responsible for the …

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When in Doubt Report, Report, Report…

It’s bound to happen…professionals make mistakes.  Some of those mistakes may lead to a professional malpractice claim while others may go unnoticed, never to be heard of again.  Given that most professionals cannot predict the future nor speak for their clients, professionals must timely report each mistake to her malpractice carrier pursuant to the applicable reporting deadlines because the policy may require it.  Even those mistakes that seem inconsequential must be reported. The risks of failing to do so can prove to be costly.

We …

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