Result Driven Impact

Professional Liability

Company Profile

Atlantic Legal Associates, a professional corporation based on the East Coast, provides general legal representation and advisory services. With annual gross revenues of approximately $4.2million, the firm is operated by two managing partners and supported by a team of 16 employees. Recognizing the importance of thorough risk management in the highly regulated legal environment, the firm proactively implemented an 831(b) Plan to mitigate professional liability risks and manage associated financial exposures.

  • INDUSTRY- Legal Services
  • SPECIFIC- General Legal Representation
  • ANNUAL GROSS REVENUE- Approx. $ 4.2 Million
  • EMPLOYEES- 16
  • OWNER STRUCTURE- Professional Corp. with 2 Managing Partners
legal services

Risk Description

Atlantic Legal Associates faced significant professional liability risk inherent in the legal services industry, particularly regarding adherence to critical deadlines and administrative accuracy. Traditional Errors and Omissions (E&O) policies typically include substantial deductibles and may not comprehensively address all scenarios of administrative oversight or negligence, potentially leaving firms exposed to financial losses and reputational harm.

Incident

Atlantic Legal Associates inadvertently missed a crucial statute of limitations deadline due to an administrative oversight. This resulted in a professional negligence claim filed against the firm. The claim was initially covered by the firm’s traditional Errors and Omissions policy but required a deductible payment of $30,000 from the firm, representing a notable immediate financial burden.

Resolution

The firm promptly filed a claim through the Professional Liability policy within their 831(b) Plan, specifically structured to cover deductible expenses associated with professional liability claims. The direct writer efficiently reviewed the claim and reimbursed the entire deductible amount of $30,000. This swift response significantly relieved the immediate financial stress and allowed Atlantic LegalAssociates to promptly address and resolve the matter.

Following the claim, the firm implemented stronger internal controls, enhancing administrative oversight to mitigate future risk. Additionally, the successful claim reinforced the comprehensive protection provided by their 831(b) Plan, particularly highlighting its potential to serve as primary coverage if traditional E&O coverage were ever unavailable.

Key Takeaways

By effectively utilizing their 831(b) Plan, Atlantic Legal Associates not only mitigated the immediate financial impacts of a professional liability claim but also strengthened internal procedures and risk management protocols, ensuring enhanced future protection and operational integrity.

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