Maryland Bar Bulletin
Publications : Bar Bulletin : February 2007

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Legal Mutual Affiliates with National Partner to Offer MSBA Members Better Service

To better serve Maryland lawyers, the Legal Mutual Liability Insurance Society of Maryland (Legal Mutual), the only legal malpractice insurance company MSBA endorses, recently affiliated with a national partner. Now, lawyers insured with Legal Mutual may take advantage of greater service, improved claims handling, better CLE and more competitive rates, and lower rates may be on the horizon. This new affiliation offers a wealth of opportunities to Maryland lawyers seeking legal malpractice insurance.

On October 1, 2006, Legal Mutual entered into a management partnership with Minnesota Lawyers Mutual (MLM) so it could continue to provide high-quality products and services to Maryland attorneys. "MLM has a successful track record of providing attorneys with reliable insurance, risk-management and claim services," asserts Cleaveland D. Miller, Chairman of Legal Mutual's Board of Directors.

"We have entered into a four-year management agreement with MLM," he explains. "MLM will manage the business of Legal Mutual, but policies remain Legal Mutual's policies, so Maryland lawyers who are insureds of Legal Mutual remain insureds of Legal Mutual. We have also entered into a re-insurance agreement with MLM, so all losses incurred under these policies will be paid by MLM."

Essentially, Legal Mutual will continue as an independent company with its own Board of Directors and Officers and a strong presence in Maryland. MLM will maintain an office in the state and assume Legal Mutual's day-to-day management and administrative functions. MLM will serve as a beacon of light, guiding Legal Mutual through unforeseen stormy waters.

Background
Although Legal Mutual has weathered many storms, in recent years it has encountered especially rough seas. "The storm actually dates back to its creation in 1986," explains Miller, "when it was established by the Maryland General Assembly with a proposed head tax on every lawyer practicing in the state at that time to fund it. Many large law firms objected to this tax because their insurance market was not the same as most MSBA members, who are solos and small firms." In the mid-1980s, these practitioners really had a hard time getting insurance, Miller recalls.

"Therefore, as a matter of compromise, the tax per lawyer was cut in half, causing Legal Mutual to start out under-capitalized," adds Miller. "It never caught up and has always been subjected to market swings." While it has sufficient capital for upswings, Miller reports that it lacks enough capital for down swings.

"We hit the good year/bad year syndrome – we were a small boat on a stormy sea," he says. "In recent years, Legal Mutual was forced to significantly increase rates by as much as 35 percent because it was so small. We were surviving, but always worried about that perfect wave that would come through and drown us."

MLM Affiliation
"We started looking for a way to handle this and sought affiliation with a large company," Miller continues. "We decided MLM was best. For one thing, MLM's philosophy is similar to Legal Mutual's in that most of its insureds are solos and small firms. Therefore, it is used to dealing with this segment of the market."

"In addition, MLM operates in 13 states, so it is used to the legal malpractice market and has already operated in and is familiar with Maryland's market," he adds. "MLM also has a strong financial rating – an A rating from AM Best. So we are working with a company that is financially strong and has strong management skills and expertise."

"This partnership is a win-win for Maryland lawyers and Legal Mutual," declares Miller. "MLM management gives us access to a much bigger staff, too, which will make a difference, and there is continuity with Legal Mutual's staff: Kay G. Kenny, Regional Sales Director and Jim Kreider, Underwriter."

As Miller looks ahead, he anticipates "a few bumps in the road as we go through this transition," but largely expects "smooth sailing." Miller and the Board of Directors will monitor MLM's performance under the two agreements and will formally meet with it on a quarterly basis to ensure problems are addressed and the agreement continues to benefit Maryland lawyers.

Maryland lawyers are encouraged to contact Kay Kenny at Legal Mutual for questions about coverage. She may be reached at (800) 422-1370, ext. 4367, or kkenny@mlmins.com. Or, to obtain an insurance quote, visit www.MDLPL.com and complete the application. You save 10 percent by applying online!

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Publications : Bar Bulletin: February 2007