Do I Need Coverage?
I like to think of insurance as something you hope to never need, but the safety net in case you do. None of us (hopefully) would drive an automobile without insurance, or worse, risk not having health insurance. To that end, IP attorneys who provide advice to clients should ensure not only that they have appropriate Professional Liability / Malpractice insurance, but also a policy that is appropriately tailored to their needs.
While I claim no expertise in insurance law, my work with lawyers and law firms of all sizes has taught me that policies come in all shapes and sizes—it is not all about premium and deductible, as there are qualitative features. For example, good policies allow their insureds to receive coverage for disciplinary defense, regulatory investigations, and even subpoenas about client matters. Moreover, while many policies allow you to choose your own counsel, some do not—creating a dilemma—do you hire counsel with specific expertise, or do you go with what hurts your pocketbook the least (for now at least)?
That is why it is important to continue to evaluate coverage (and coverage gaps) to ensure that you are not only protected from malpractice issues, but also wide-ranging risks including employment practices, cyber issues, as well as social engineering.
Using Your Insurance
Forgive me while I clarify what I said above—while you should hope to never need to utilize your insurance, it is there for a reason. Moreover, insurance is a highly-regulated product, with specific anti-fraud statutes in various states that could make submitting false or inaccurate information on an application or renewal a crime.
So let’s provide some context. As a generalization, in a claims-made policy, the insured is generally required to inform the carrier of the circumstances surrounding the claim within a specific time—often 30 days. This could be anything from the filing of a malpractice suit, a demand latter, fee arbitration, disciplinary action or investigation, or even often a threat of any of the preceding.
Example: Client complains about you to the USPTO’s Office of Enrollment and Discipline. While the complaint is without merit, you have been contacted by OED. However, you determine that it is appropriate to pay out of pocket to hire IP Ethics counsel and save the “claim” for when you really need it. Upon renewal of your policy, you fail to disclose the OED matter. Your conduct may create grounds for cancellation of your policy by not timely reporting the claim—and for failing to inform the carrier about that risk.
Best Practices for Reporting
Work closely with your broker and carrier to review the process for submitting information to a carrier. While it may colloquially be known as filing a claim, sometimes it can be simply known as a notification of circumstance—that you are not seeking the carrier’s intervention, but just notifying them of the issue.
While certain things may clearly not be reportable (i.e., a client being upset that you did not pick up their phone call), other seemingly small issues can still be reportable (i.e., a demand letter where a client claims you made an error and wants their money back—even if they later retract it). To avoid a loss of coverage, it is worthwhile to talk to your broker or counsel regarding best practices, and craft language that can be sent to the carrier to protect your rights.
