CHICAGO—Beazley Group, a leading underwriter of liability insurance for major U.S. law firms, is partnering with a range of specialist advisors—including New York-based corporate and financial public relations specialist Kekst and Company—to help law firms address the total economic cost deriving from malpractice lawsuits.
“A major professional liability claim for a large law firm could cost between $5 million and $50 million,” says Lloyd Fielder, head of Beazley’s lawyers’ professional liability team. “But the total economic cost will invariably be higher, and can sometimes be a multiple of the insured portion of the firm’s losses.” Among the components of the total economic cost of malpractice claims not covered by insurance, according to Fielder:
· The law firm’s self insured deductible and any losses that exceed the firm’s limit of indemnity from its insurer.
· The opportunity cost in billable hours deriving from the diversion of firm resources to resolve the lawsuit.
· The loss of existing and prospective clients deterred from the firm by unwelcome publicity relating to the lawsuit.
· The loss of talented staff from the firm and the deterrent posed to prospective recruits caused by an embarrassing and well-publicized malpractice lawsuit.
According to Fielder, a common causal factor in many of these uninsured losses is the damage to a firm’s reputation that a high profile malpractice suit can generate. So as part of its law firm risk management offering, Beazley is partnering with strategic communications experts Kekst and Company to offer law firm clients reputation management advice in the event of a claim.
“We know that negative publicity can increase the cost of a claim,” says Fielder. “But it can also transform a manageable problem into a crisis that profoundly affects the law firm’s current and future business. Some of our clients already work with Kekst and Company and the depth of their experience in crisis and reputation management is unrivalled.”