PHIL’S CORNER: Impact of COVID-19 on LPL Claims – If Any
Phil’s Corner is a special column from OAMIC’s President & CEO Phil Fraim that is sent in our e-newsletter each month.
So far in 2020, claims in our office have been improved both in the number of new matters and the average size of those matters. Is this a false sense of security, the calm before the storm? It is way too early in the game to make predictions on what is known as a relatively long-tail line of coverage. Adding in variables like a volatile economy during a large portion of this time period, the shelter-in-place mandates, closing of courts, remote work and other factors could cause even a trusted crystal ball to give false readings.
One thing we know about claims on professionals is that we see an uptick during rough or down economic times. Our experience bears this out. We can go back and look at every down time and correlate that with worsened claim experience. The last of which was in 2009 after the 2008 economic collapse.
Does the latest short-lived financial downturn during the COVID-19 shutdown present the same scenario? I’m not sure anything but time will provide that answer.
What kind of issues do give rise to concerns, from a claims standpoint, as we move further away from the COVID-19 shutdown? I think we first have to keep our eye on missing deadlines. Frustratingly, missed deadlines represent approximately 30% of claims during normal times. We have to think that number is not going to go down. With offices and courts closed, several emergency orders were issued extending deadlines. So, the question then becomes whether deadlines were being noted in calendaring systems and, if so, were they adjusted? Please be diligent in maintaining calendars and responding to those calendared items – it’s one of the most important risk management tips we can offer.
Another issue can be remote work. There have been, and still are to some degree, many instances of work-from-home arrangements for lawyers. Many have figured out how to maintain productivity from home and how to do client meetings by video, etc. Regardless, some questions about remote work remain. Is anyone making sure firm procedures and protocols are being enforced and followed? Are the same cybersecurity measures in place, even if the individual is using personal devices? Is company information being downloaded and stored on the personal devices? Are client communications, especially returning of phone calls and providing client information, being done timely?
Cybersecurity and privacy issues have become part of a core business activity for law firms, and this hasn’t changed. It requires expertise and resources to put in place and then diligent vigilance to stick to protocols. If protocols and policies are not followed, you have lost the battle before the war even begins. The goal is to make it extremely difficult for hackers and to minimize any harm to the firm. There is no 100% guarantee of never having a cyber event (ask some of the largest companies in the country whom you have read about), but you can minimize your risk with some simple steps.
Lastly, not being able to work from the normal office setting can have a negative emotional impact on some. We are starting to learn from Chicago and other areas of the country where workers who have not been in the office since March, with no return date in sight, have begun to feel detached. There can be a feeling of being closed in if you only see the same four walls every day, and you begin to miss what was once your normal routine. This can make it more difficult to carry out normal client relations. Will this pass? Is this the new norm? The answer is probably somewhere in between. However, until we know, we all need to strive to maintain our mental health and productivity to ensure we continue to feel our best and do our best.
Until next time,