Legal Mutual Affiliates with National Partner to Offer
MSBA Members Better Service
By Janet Stidman Eveleth
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!
