Frequently Asked Questions About the Professional Liability FundAs a board member and now chair of the OSB Professional Liability Fund, I hear a lot of comments and questions from lawyers about what the PLF does and does not do. I am taking this opportunity to dispel some misconceptions and share with all bar members answers to some of our most common questions.
The PLF is an independently managed quasi-subdivision of the bar. Currently, Oregon is the only state in the country that requires lawyers to have malpractice insurance. We have our own board of directors, appointed by the OSB Board of Governors, which consists of nine members (seven attorneys and two public members) from across the state.
Your communications with the PLF are protected by statute as well as OSB and PLF policies. All claims information is confidential. All communication with our Oregon Attorney Assistance Program and practice management attorneys is also confidential. This confidentiality extends to the Oregon State Bar, including regulatory services (discipline), the Board of Governors, and all other OSB-related entities.
What are we doing to keep PLF coverage affordable? We work hard to keep the annual assessment both stable and as low as possible. The current $3,500 assessment hasn’t changed since 2011. We also offer discounts for new lawyers: 40 percent in the first year and 20 percent in the second and third years of coverage.
The assessment is set at the amount our actuaries predict will provide sufficient income during the year to cover the cost of claims and operating expenses. The cost-of-claims figure is based on predictions of the number of claims and the projected cost of those claims. Approximately 75 percent of your assessment dollars covers claims, and 25 percent goes to operations.
The assessment does not fully cover our claims costs, so the PLF relies on investments to make up the difference and to provide a reserve for significant losses. Because the PLF relies on its investment income to help pay for claims and operations, it must charge lawyers who pay in installments a finance charge to account for that loss of investment income.
Why do all lawyers pay the same amount, even part-time lawyers and lawyers who have never had claims? The fund is a shared-risk pool. To keep the assessment stable and affordable for all lawyers, we do not “underwrite” – or charge based on practice area, claims experience, or other factors. If we charged different rates for different lawyers or based on different practice areas, our operational costs would increase, thereby increasing our assessment. A single assessment also ensures everyone has coverage. If rates for some lawyers increased significantly, we would effectively disbar those lawyers who could not afford their assessment.
What areas of law generate the most claims and the most expensive claims? The most claims are generated by domestic relations (1,371 – 17 percent), personal injury (1,262 – 15 percent), and debtor-creditor/bankruptcy (1,111 – 13 percent).
The most expensive areas of law based on total indemnity paid are personal injury ($13,739,057 – 20 percent), real estate ($9,822,761 – 14 percent), and business law ($8,593,521 – 12 percent).
What about by size of firm? For claims opened in 2015, so far we have spent $6.52 million on claims against sole practitioners, $1.64 million for small firms (2-5 lawyers), and $1.71 million for claims against large firms (15 or more lawyers).
People also ask what other benefits they get from the liability fund. Twenty-five percent of our operating budget is devoted to loss prevention programs. The PLF produces more than 400 downloadable practice aids, maintains a library of 90 CLEs that can be downloaded and publishes four handbooks that are free to OSB members.
PLF claims attorneys field over 1,000 calls a year from covered parties about potential mistakes, risks, and coverage.
The fund’s three practice management attorneys field calls about best office systems, trust accounting, cyber protection, and similar issues. In 2016, they made 246 office visits throughout the state to work one-on-one with lawyers and staff on practice management systems.
Finally, the Oregon Attorney Assistance Program provides support to lawyers with mental health and addiction issues, career or life transitions, and other impediments to successful practice. The OAAP’s confidentiality is separate from both the Professional Liability Fund and the Oregon State Bar: No one at the PLF or at the OSB is provided any information about who uses the OAAP’s services or for what purpose.
Teresa A. Statler
Chair, PLF Board of Directors
Ms. Statler has a solo immigration law practice in Portland and has been an OSB member since 1991.