Large Malpractice Claims in U.S. on the Rise

While the frequency of malpractice claims against law firms appears to be leveling off, the number of large claims is apparently on the rise. In a new major insurance study, a growing number of leading malpractice insurers have had to pay claims in excess of $50 million.

The author of the study polled six insurance companies that combined work with more than 75% of large and midsized U.S. law firms. Four of the six insurers reported paying a claim of $100 million or greater, while another had made a payment of $50 – $100 million. All the insurers stated that they’ve seen an increase in the number of claims with a reserve of more than $500,000 in 2012.

The increase in large claims is most likely mainly due to the sheer magnitude of the transactions, as well as the increased defense costs associated with complex litigation related to the malpractice suits.

Areas of practice where the majority of suits have sprung include:

Real estate
Corporate and securities work (which encompasses merger and acquisition activities as well as other corporate finance transactions)
Conflict of interest
Failure to calendar or follow-up with clients

Getting proactive in claims management

As the severity of malpractice claims increases, law firms should focus on their risk management and proactive claims management efforts, which may help save firms premium dollars, loss and defense expenses.

There are certain claim-reporting requirements of Professional Liability policies for attorneys. Failing to report a claim, or failing to do so in a timely manner, can lead to a possible disclaimer of coverage by malpractice insurers.

Key indicators that a claim may be made against the firm, and therefore should be reported immediately to the insurance company as a potential claim, include:

Attorney discovers an error in legal work performed.

Client questions the actions of counsel after the case has concluded; or after a motion has been lost.

An unexpected jury verdict against the client; or after the attorney has advised against accepting a settlement offer.

A default judgment is entered against the client due to a missed filing deadline.

The client files a grievance against one or more of the attorneys at the firm.

The client changes counsel.

The firm sues a client for fees.

Understanding policy reporting requirements and teaming with an experienced professional liability insurance broker can go a long way to reducing the magnitude of an individual claim and its potential financial consequences.

In a Visit to an Exhibit, Recalling a Date With History in 1941

The small, old-fashioned radio at the entrance was a time machine for my father, Lester Bernstein, 92, who was getting a preview of the “World War II & NYC” exhibition at the New-York Historical Society.

A grown-up grandson was wheeling him through the exhibit, which opened on Friday. But suddenly my father was again a 21-year-old reporter for The New York Times faced with what seemed like an unexciting new assignment: to write hourly news bulletins for the paper’s nascent venture into radio broadcasting.

“I regarded myself as ‘stuck’ with the assignment,” he once wrote in an e-mail, looking back on a career that began as 17-year-old campus correspondent for The Times at Columbia University, and ended as the editor of an award-winning Newsweek magazine.

On the sunny Sunday afternoon when he was due to start, he was still at home on West 106th Street, listening to a New York Giants football game, when word from Washington interrupted the broadcast: President Roosevelt had just announced the Japanese attack on Pearl Harbor.

“I rushed to 43rd Street with a sudden new interest in the job,” he said.

The Times newsroom where I work is now a few blocks from where my dad hustled to his date with history on Dec. 7, 1941. But his experience that day seems like the forgotten prehistory of today’s continuous news operation.

He found a growing pile of wire copy on his wooden desk and a Teletype operator waiting to transmit his words to WMCA. Collaboration between the paper and the radio station, precursor to a long relationship with WQXR, had been in place for only seven days. It made him the first Times staffer to provide the public with news that was already changing the world, the city and his life.

In the exhibit, a paragraph summarizes the devastation wreaked by the surprise attack, which killed more than 2,400 people, wounded nearly 1,200, wrecked 14 ships and almost 300 planes. But the compression of history gave way when my father recalled his scramble to turn out short, simple informative sentences on a day when such details were not public, and “the name Pearl Harbor didn’t mean anything.”

Even then, it was clear the damage was heavy and widespread, with much loss of life. The president was to address Congress the next day. My father remembers writing the line, “Full hostilities between the United States and Japan appear inevitable.’’

An old timer in charge of the city desk that day, Walter Fenton, was scandalized. “Hey,” he said, “You can’t say that!” But it was too late – the words were already on the air. And after all, they were true.

By then other reporters and editors were swarming in to volunteer. Among them was the senior reporter who headed the radio bulletin desk, Byron Darnton, known as Barney, who had been driving his family on vacation when he heard the news over the car radio. Later, he would lose his life as a Times war correspondent in Asia; his infant son, John Darnton, who grew up to become a foreign correspondent and longtime editor for The Times, would write a memoir about his lost father.

Like 900,000 other New Yorkers, my father, too, went to war.

“I was drafted in December ’42,” he said, gazing at photos of 1943 rallies at Madison Square Garden. That year, he was in the 102nd Infantry Division, 9th Army, in basic training in Texas, where he fell in love at a U.S.O. dance. In 1944, he shipped out from Fort Dix, N.J., to Europe, on a troopship so overcrowded, he said, that “the chow line wound through the latrines.”

“Mimi wrote me every day,” he added, naming the woman who became his wife, and is now a great-grandmother.

At the exhibit, high in a glass case, a sign from Katz’s deli made us laugh: “Send a Salami to Your Boy in the Army.” The owner’s three sons, all in the service, had supposedly discovered that in a pinch, kosher salamis served as ammunition.

There were other surprises, like a version of the vests that were placed on carrier pigeons and that had been designed by a New York brassiere-maker for Signal Corps paratroopers. “Well I’ll be damned,” said my father, who was in the Signal Corps.

We paused at a cryptography machine, an ungainly, oversize typewriter with extra dials and wheels. “I used to operate one of those,” he said. “You’d change the setting of the wheels every day, so somebody with the same machine would be able to decode what you wrote. This could be a German version, but it was very similar.”

Indeed, it was a Kriegsmarine Enigma model, developed by the Navy to help sailors find the real thing when they boarded enemy U-boats, some prowling right off Coney Island.

We admired the Cyclotron, part of the secret Manhattan Project at Columbia University. “One of my professors was very involved in that,” my father remarked. “John Dunning. Physics.”

Sure enough, his teacher for a science survey course appeared in a photo as a scientist racing the Nazis to build the atom bomb.

Time blurred again at the end, when we came to a huge painting of the delirious joy in Times Square as news of the Allied victory broke. Like many New Yorkers, my father had missed that famous home front scene on Aug. 14, 1945. He was still in Germany, where his division stopped 45 miles from Berlin.

But as he looked at the Times Tower soaring above the crowd in the painting, it recalled the thrill of his very first assignment as a full-time staffer for this newspaper, writing for the tower’s electronic “zipper” banner.

“I ran out into Times Square to see my stuff,” he confessed.

Seven decades later, a grandson grinned, too. “Like Twitter,” he said.

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Response to a Cranky Bus Passenger

Dear Diary:

On a sunny weekday afternoon, I found myself on an uptown-bound M104. It was filled to the brim with the usual suspects for that time of day — seniors, nannies and freelancers.

Around 72nd Street, a grandmother with grandson in hand boarded our vehicle. As he seemed intimidated by the crowd, she softly encouraged the little boy to walk to the back of the bus, offering sweet words in Russian. Together, they spotted an open seat next to a graying, sour-looking woman wearing a long pink dress accessorized with an array of plastic costume jewelry.

“Don’t put the child next to me,” she snapped. Everyone on the bus took notice of her remark and cautiously lifted their eyes from their cellphones.

“Why, what’s wrong?” said the grandmother. “Are you contagious?”

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Judge Tells Espada and Lawyer They Are Stuck With Each Other

A Federal District Court judge told former State Senator Pedro Espada Jr. and his estranged lawyer on Thursday that they must continue to work together even though both men had asked him to dissolve the relationship.

Mr. Espada was convicted in May of stealing hundreds of thousands of dollars from the Soundview Healthcare Network, an organization in the Bronx that he founded and led. He is still facing a tax evasion trial in Federal District Court in Manhattan.

His lawyer in the tax case, Daniel A. Hochheiser, had asked Judge William H. Pauley III to allow him to withdraw from the case, saying Mr. Espada had not paid him the agreed-upon amounts. Mr. Espada countered in court on Wednesday that Mr. Hochheiser had not represented him correctly.

After a brief proceeding on Thursday, Judge Pauley told the two that they would have to find a way to get through the trial together.

“Mr. Espada’s complaints about his counsel are not credible,” Judge Pauley said, adding that a fee dispute of the sort described by Mr. Hochheiser did not absolve a lawyer’s responsibility to defend a client.

Both men said that they accepted the judge’s decision and would begin preparing for the trial, which is scheduled to begin Nov. 5.

But it remains to be seen how the lawyer and the client will function after two days of exchanging accusations, with Mr. Hochheiser at one point indicating Mr. Espada and telling Judge Pauley, “Now I consider him my adversary,” and Mr. Espada telling the judge that the two had experienced “a total breakdown in our relationship.”

Mr. Espada said Mr. Hochheiser had failed to inform him of a plea offer from prosecutors and had not met with him frequently enough.

Mr. Hochheiser told the judge that he had told Mr. Espada about the plea offer and described his client as difficult to communicate with.

“He tends to filibuster at meetings,” he said. “It is very difficult to keep Mr. Espada focused on the facts at issue.”

A few moments later, Mr. Hochheiser told the judge that he had been in close contact with his client, even arranging meetings at his home in Westchester County to accommodate Mr. Espada, who, he said, “used to be a V.I.P.”

At that, Mr. Espada rose from his chair and objected.

“I take exception to this ‘used to be,’” he said, before being interrupted by Judge Pauley, who sternly instructed him to sit down and cease speaking.

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Bit Parts but No Bit Players at Public Theater Dedication

To be or not to be a Shakespearean actor, that was the question. The man who was about to read from “A Midsummer Night’s Dream” explained his motivation this way: “I’m going to be unemployed in 453 days and out interviewing for new jobs.”

Then Mayor Michael R. Bloomberg proceeded to deliver a passage from the comedy that Shakespeare is thought to have written when he was in his mid-30s. Like Mandy Patinkin and Vanessa Redgrave, who followed the mayor in delivering bits of Shakespeare during a ceremony at the Public Theater on Thursday, Mr. Bloomberg read his lines.

The mayor, who said later that it was his debut in Shakespeare, popped the “p” in the word “accompany.” Still, he got a standing ovation — but most of the audience was standing anyway, and had been for 15 or 20 minutes, because the ceremony took place in the lobby of the Public, not a place with rows and rows of seats. These were the mayor’s lines, from Act V, Scene 1:

Joy, gentle friends! Joy and fresh days of love
Accompany your hearts!

The ceremony celebrated the completion of a $40 million renovation of the Public’s 1850s Renaissance Revival building, in the East Village. It has new granite stairs and a new canopy outside, along with reopened archways inside (they had been sealed off sometime in the past) and a new snack bar in the center of the lobby. It was dispensing coffee and juice as people mingled before the speeches — and the Shakespeare readings.

The cast was varied, to say the least. Mr. Patinkin read from “The Tempest” and added a mention of Joseph Papp, who founded the Public. Mr. Papp’s widow, Gail, read three lines from “Coriolanus.” The architect James S. Polshek, who was the design counsel on the renovation, read four lines from “Henry IV” that sounded like a job description, for they mentioned surveying a plot, drawing a model and figuring the cost when, as Shakespeare put it, “we mean to build.” Miss Redgrave read from “As You Like It,” while the City Council speaker, Christine C. Quinn, read from “All’s Well That Ends Well.”

Oskar Eustis, the Public’s artistic director, said the readings were a “kind of a peculiar benediction” after the speeches, which included one by Luis A. Urbinas, the president of the Ford Foundation, which gave $2 million for the renovation and for which the new lobby was named.

Mr. Urbinas said he had discovered the Public as a teenager from the South Bronx in the 1970s when he and a friend went to a free performance of “Macbeth.” They were approached, Mr. Urbinas recalled, by “what seemed to our high school eyes this ancient man — he was 50. He explained we were way too early, but we could hang around.” The man turned out to be Mr. Papp, he said.

For his part, Mr. Bloomberg said he had considered recreating “some of the theater’s greatest moments.”

“For example, I could perform that showstopper from the Public’s beloved ‘The Pirates of Penzance,’ my favorite Gilbert and Sullivan,” he said, “and I would call it, ‘I am the model of the modern mayor general.’”

The crowd laughed, perhaps a little uneasily, as if the next line might be a real groaner, and the mayor said, “It’s not easy to write this stuff, folks, you know?”

He suggested changing one of the most famous songs in “The Threepenny Opera” to “Mike the Knife.”

“Or maybe I could revive the performance I gave at a charity event a year or so ago with the cast of ‘Hair,’” he said. “Thankfully, there was no nude scene there.” A moment later, he said, “On the advice of our corporation counsel, Michael Cardozo, who doubles as a board member of the Public, I won’t do it today, either.” (Clothed cast members from the Public’s 2008 revival of “Hair’’ later performed “Let the Sun Shine In.”)

Then, without so much as a spotlight or a snappy song like “One” from “A Chorus Line,” Mr. Eustis introduced what he called the mayor’s “audition for his new job, which I promise I will take very seriously.”

Afterward, Mr. Eustis said, “There is no question I am going to give him a callback.” He also promised to give the mayor “a few adjustments, because that’s how we figure out what his range is.”

“I’m actually sort of serious,” Mr. Eustis said.

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