Many lawyers see legal malpractice insurance as a necessary cost incurred being a member of bar associations. But insurance is very important in the business of solos and small firms as it can greatly affect what happens after a catastrophic event. Every business owner can benefit from knowing how to custom create insurance plans for themselves, rather than accepting a cookie-cutter solution. Like with anything you buy, there are tips and tricks to getting a better overall deal.
In this episode of The Un-Billable Hour, Christopher Anderson interviews Michael Carroll, a professional liability insurance expert. Carroll describes specific insurance products that lawyers should examine, policies that may or may not benefit a small or medium firm practice, and how making relatively inexpensive changes now can affect your potential malpractice lawsuit later.
- Claims Expenses Inside/Outside the Limit (CEIL versus CEOL)
- First Dollar Defense
- Who needs office business insurance
- Data breach liability
- Cyber liability
- Insurance for business continuity in places like Florida
Michael Carroll spent the last 27 years insuring and protecting lawyers and law firms. He is considered a specialist in his field and authored The Naked Lawyer, a book about lawyers professional liability, workers comp, umbrella, and office business insurance. The Carroll Insurance Group was selected in 2014 as a best practices agency.
Advertiser: Managing your law practice can be challenging. Marketing, time management, attracting clients and all the things besides the cases that you need to do that aren’t billable. Welcome to this edition of the Un-Billable Hour, the law practice advisory podcast. This is where you’ll get the information you’ll need from expert guests, and host Christopher Anderson. Here, on Legal Talk Network.
Christopher Anderson: Welcome to the Un-Billable Hour, the law practice advisory podcast, helping attorneys improve their businesses. We’re glad you can listen today on the Legal Talk Network. I’m your host, Christopher Anderson. I am an attorney with a singular passion for helping other lawyers be more successful with their law firm businesses. I work directly with lawyers across the country to help them achieve success as they define it. In the Un-Billable Hour, each month, we explore an area important to growing revenues, giving you back more of your time and or improving your professional satisfaction in one of the key areas of your business. As an attorney who has built and managed law firms in Georgia and New York city, created an innovative software for lawyers at LexisNexis, and helped many other attorneys grow professionally and personally, I believe you should have a law firm that provides. for you. In this program, I have a chance to speak to you as I do in presentations across the country about what it takes to build and operate your law firm like the business that it is. I have the chance to introduce you to a new guest each month to talk about how to make that business work for you instead of the other way around. Today’s episode of the Un-Billable Hour is Optimizing Insurance for your Law Practice. My guest today is The Naked Lawyer, leveraging the multibillion dollar lawyers professional liability, workers comp and business insurance industry to your benefit. Let me tell you, this is a great topic. Many of us see legal malpractice insurance as a necessary evil, a cost we must incur to meet our obligation to the Bars in which we belong. My guest today sees it differently, and his name is Michael Carroll.
Michael was born in Bangor, Maine, and has been a long time resident of Toledo, Ohio, with his bride of over 20 years and his four kids. Michael spent the last 27 years insuring and protecting lawyers and law firms. He is considered a specialist in his field of insurance and one can quickly sense his passion for the service he provides and the message he has to share with lawyers and law firms all across the country. The Carroll Insurance Group, which Mike heads, and its subsidiary, The Insuring Lawyer, was selected in 2014 as a best practices agency. That is one of the top insurance brokers nationally out of over 37,500, and it was recognized by the Independent Insurance Agents Association. This is the equivalent of being like a top five college football program year in and year out, like being a perennial Super Bowl contender. Ensuring the lawyer has offices, Maumee, Ohio, which is a suburb of Toledo, and in Pheonix, Arizona. Michael himself loves attending sporting events and travels all over the country. He loves to travel and meet many of his favorite people, lawyers just like you. I personally have seen Michael speak over half a dozen times and I learn something every single time, so I’m really thrilled to bring him to the Un-Billable Hour. Now that you know about Michael, let’s welcome him to the show. Michael, welcome to the Un-Billable Hour.
Michael Carroll: Christopher, I love what you said about me, really helped my confidence today. I thank you very much and a pleasure to be here, thanks for having me on your show.
Christopher Anderson: Not at all. Fortunately it’s radio so nobody can see you blushing. So by introduction, it wasn’t very long, and what I want to get a little bit more from you is what is it that you actually do for your clients? You’re not just a seller of malpractice insurance, do you do more? What is it that you do for your clients?
Michael Carroll: Excellent question. The vast majority of my peer group tends to fall into the terminologies what is known as an order taker. And specifically for lawyers, it’s a very underserved marketplace. The big law firms have the big monster insurance brokers that do a fine enough job, we’ll give them that. But for the ten lawyer or less, the closer you get to one, the insurance industry, the insurance companies, the insurers themselves, the insurance agencies or brokers, it is massively underserved and it’s kind of like you’d be lucky if we even offer you protection or coverage. Specifically, we’ll talk about, let’s start with the lawyer’s professional liability. Insurance companies – Christopher, you’ve heard me share this when I speak in front of hundreds of lawyers at a time. The insurance companies are in business to make a profit. That’s always it and I ask that question a lot. Most people get that, lawyers are very smart and an on the ball bunch. But when you ask a general room outside of lawyers why are insurance companies in business, they answer to protect you at a time of loss or to help you out if you have a claim. Or some people are sarcastic and say they screw you over and you laugh and what have you. But specifically, insurance companies are in business to make a profit. And by doing that, they want to offer you the minimum amount of protection for the maximum premium allowable by law. They can’t gauge you. So when you’re talking about an indifferent marketplace where you can count maybe on all the digits on our body, there may be 20 to 30 insurers that actually write lawyers professional liability. And then when it gets to the agency and the broker level, the distribution if you will, it’s very apathetic, it’s kind of one size fits all. There’s a lot of caveats and hence the word, “naked,” who wants to be caught naked and caught with your pants down, as the saying goes. So there are plenty of things where we can get into specifics if you’d like me to. But there are all kinds of additions you can put on your lawyers professional liability just focusing on that portion of protecting your empire, if you will. If you’re a lawyer, your entire law firm, but to have endorsements put onto your policy that some of them are free, you just need to ask for them. Others are in the hundreds of dollars a year for millions of dollars of protection. So what I do to answer in a very long way and just to focus on a lawyers professional liability, we’ll talk about office, business, insurance, workers comp, data breach, harassment. We’ll get into some of the other specifics, but all of that adds up to taking a look at each individual law firm and saying what are your exposures. If you don’t have an employee, you obviously don’t need workers comp. If you don’t have an employee, you don’t need employment practices liability, which is harassment, unfair termination and discrimination. But most lawyers do have at least one employee, a paralegal. And these again, it’s massively underserved. My peer group will just slap on some one size fits all policy and then it’s all good until it isn’t. And then it’s after the fact and then there’s who do you sue, do you sue the insurance agent or broker? Is it your fault because you signed something? And it’s my job to protect law firms properly and look at it. This is what I specialize in, I’m not a one size fits all. I’m not overwriting manufacturing for firms or transmission shops or carpenters or anything like that. Lawyers is all that I do and we do it on a national basis. So hopefully, Christopher, that answers your question.
Christopher Anderson: Indeed. A thing my grandfather taught me when I was young, just getting my first car insurance policy, said you can only judge an insurance company’s quality the day you make a claim. And that always stuck with me and taught me not to always just shop for the cheapest premium. But it sounds like what you do is you help law firms and the reason I wanted you to come join us on the show is I wanted to help this audience become better educated consumers of these products, to know where their exposures are, to know where the pitfalls are. And I think you just spoke a little bit to that. Let’s jump to one. In your book, The Naked Lawyer, one of the things you discussed is the grisly gremlins of insurance exclusions. So what are these? What are some of the exclusions that we probably, as lawyers – because we’re lawyers we don’t read contracts, or even if we do we might gloss over in a malpractice insurance that we really should be watching out for.
Michael Carroll: Absolutely, excellent question. So the grisly gremlins. Let’s start with lawyers professional liability. You will see the vast majority of policies are written where the defense limits are included inside. The acronym is C, Claims, E, Expense, I, Inside, L, Limits. So CEIL, and the vast majority of insurance policies that I see when someone inquires and contexts me is writing on a CEIL basis. You can get it written in what is know as a CEOL basis. And what’s the opposite of inside? Outside. Where that’s important is therefore, if you are involved in any type of litigation, whether it’s a vicarious garbage lawsuit or it’s a real lawsuit where someone in your firm made a mistake, yourself included, and you’re being sued for your professional liability, the defense limits will not be eroded against your limit of liability, whatever that is. We always like to tell or advise, if you will, law firms to get the million dollars. But when you’re talking sometimes to a startup, someone who was successful in a big law firm, they’re starting up, they just want to keep the budget and the price be 20 to 100 thousand and a million is not as much as you think. There are certain areas of practice where it is massive, but in most areas of practice, you may be talking a thousand, it may be 2 thousand a year. But if you’re a start up and you’re thinking, “Hey, I’ve got rent and my spouse is stressing out about this and so am I,” maybe that 1 or 2 thousand is important to you in the first year, which is understandable. Revenues are not that projected to be in the millions yet, and if they are, then that would obviously be easy to take the million. So if you started with say, the lowest possible protection at 100,000 dollars. If you incurred defense cost to 50,000, if you have CEIL, Christopher, you’d be down, it’s simple math. You’d be down to $50,000 left if you were judged against in that suit. And suddenly, your protection that you pay your good, hard earned money to have is now being cut in half, but your premium didn’t get cut in half. To have that endorsement, the CEOL may run you $100,000 a year. So therefore, you can have unlimited defense cost and that’s very important.
Christopher Anderson: Let me just get that one straight, so if someone switches from CEIL to CEOL, their defense limits go from whatever their policy limits are and crowding out what can actually be paid out to completely uncapped?
Michael Carroll: Correct.
Christopher Anderson: For maybe $100 or $200 a year?
Michael Carroll: Exactly correct. I’ve seen some insurers are going towards, Christopher, that they’ll match the liability limit. So if you had 100,000, in effect you’re getting double the protection, but most insurers will give you unlimited defense costs for however much it costs. So you’re absolutely correct, you are right.
Christopher Anderson: So I’ve been personally buying malpractice insurance now for 13 years. And until I heard that from you, I’ve never heard it before.
Michael Carroll: Yeah. It’s outstanding. So there’s one. Again, my peer grew, fat lazy and happy, and fire them. You deserve better. At the end of the day, as a lawyer, if you aren’t doing your job, you deserve to get fired. Whatever it is we do in life, we see it in athletics. We see it in motion pictures, we see it in the finance world, the banking world, politics, people always crying for people to get them out of office. Theirs is just a little different, you can’t fire them right on the spot. But in the accurate thinking, the Napoleon Hill term, accurate thinking, when it calls for someone to be fired, you have to be swift, that’s accurate thinking. We’re not in business to make friends or to not hurt people’s feelings. You don’t have to be dishonest or unethical, but you have to do what’s best for you. And the danger on the lawyers professional liability, unlike car insurance, which is a great example, Christopher, and thanks for bringing that up, you were advised properly. But the difference between even your office business insurance and your workers comp at some level. But with a lawyers professional liability, you are stuck until renewal, unless it is glaringly horrible. Because what you lose then is your retro date or some accommodations that can be made where it’s glaringly awful that you can switch mid period or before your renewal date. But if you do that, more often than not, well into the 90th percentile, you would have to pay what is known as tail coverage as if you were retiring or dissolving your firm. Or you would just lose all of that protection going back to your inception date of, let’s say for example, September 1st of 2000 or 1989 or 2008 or whatever, and you don’t want to do that. So the claims expense outside, big, big time deal to have. The other one that falls right in line with the lawyers professional liability is the first dollar defense. And what that is is that you, as a law firm, most law firms choose at least a $2,500 deductible. 5,000 is becoming more common, and I’ve been seeing them on some of the 10 and 20 lawyer firms, but my wheel of house is a ten lawyer but we do have a handful that’s larger than that. They’re going with 10, 15, 25 thousand because they can afford that in the event of a loss. Their revenue is within reason and it offsets the premium. The higher the deductible, the lower the premium, obviously. But to have what is known as first dollar defense, acronym FDD, what that is simply if you’re named in a suit, we have a disgruntled client, or they owe you a ton of money and your billings have somehow got by you. Let’s assume you have a tight billing structure and you threaten to litigate against them and they flip the script against you and say, “The reason I’m not paying you is because you were terrible. I’m suing you for incompetence and negligence, I’m not paying you,” and a peer jumps on their cause and they sue you. Well, that kind of a suit, if you don’t have first dollar defense, you’re going to end up paying the first $2,500 dollars or $5,000 or even $10,000 to defend that claim, whether you have CEIL or CEOL. By having first dollar defense, and again, some companies included, very rare, but more commonly, again it’s in the hundreds of dollars a year to get that endorsement in. I do it on my professional liability. In the insurance industry, it’s called errors and omissions, that therefore some disgruntled client in a 28 career – knock on wood – we’ve never had an errors and omissions suit, but we have had 3 in a 28 year career where someone in a blameless society wanted to make it our fault. Our files were tight, it was thrown out. But to have to deal with that, it was a situation where we didn’t pay the deductible because we have what’s known as the first dollar defense. So a lot of people like that because if you’re like I am and you have great workflows and systems because I’ve been taught properly, not because I’m such a smart guy. Far from it, but I’m an old guy who likes to be coached so I have a coach. Christopher, you’re a well known coach within the legal community. I love that stuff and that was when those deals where the workflows and systems allowed us to be successful in our defense but we did not have to pay. And we carry a $10,000 deductible, I would have been out 10 grand because it went on and on and on and whatever. So that’s a big one right there.
Christopher Anderson: So just again, so I’m clear, if you get the first dollar defense, you got a $5,000 deductible or $10,000 deductible, but the claim is unsuccessful, you go out of pocket 0 even though the insurance company picked up the costs of defense.
Michael Carroll: Correct, absolutely correct. The only time you’re sharing the deductible is if you were negligent. If someone in my office said, “Yes, Joe or Jane law firm, you’re protected or covered for event A and B,” and even A and B both happen and they’re not protected because they just went off script, which would be a workflow disaster internally. That’s why we don’t have that. But say someone was just completely out to lunch that day, human beings do occasionally go off script. We would obviously have to pay the deductible because we were negligent and a loss incurred. But you hit the nail on the head, Christoper, that you would not have to pay a deductible if there was no claim. And the defense would be, again, if you had the CEOL unlimited, but that’s a big deal. So again, most insurance companies, if you don’t write a lot of volume, let me add this into it not to toot my own horn. But if you were known to the insurance companies as an expert, which I am, they realize that we are offering this to top flight firms. We can tell someone who’s kind of, “Well, I only need it because I need it to get this account,” where someone is going to be flying by the seat of their pants. But a law firm that has tight workflows and systems is going to be a law firm that’s not going to get into any type of situations like that. So it’s a profitable endeavor for the insurance company to offer them those things because it makes them feel better about their whole insurance portfolio versus take it or leave it, jerk, and by the way at renewal, send us the insurance company and broker agency roses and candy. Who wants to be the client in that relationship? That’s like an old school bullying movie where you’ve got to pay the bully and gave him half your lunch to not get beat up. No one likes that relationship. But in an insurance agency, if you’re working with someone who doesn’t have that kind of pull to say to the insurer, the insurance company that hey, this is a risk worthy of offering first dollar defense and CEOL claims expense outside limits. You won’t be successful because you’re considered to be a novice to them versus an expert that they work with you on a daily basis because you specialize in it. And no one wants to fool around with a thousand dollar premium in my world. The insurance agencies and brokers find that to be just not worth their time. And it is well worth your time when you do it in mass. Christopher, what are there? Something like 45,000 law firms, is that correct?
Christopher Anderson: No, no no. Depending on the source of users, between 1.2 and 1.6 million lawyers. There are 480 to – but again, who’s source you use – lawyers practicing in a one to five lawyer space in about 400,000 firms. So the space is pretty big and the opportunities here are great for the insurance companies to make a buck. But let me just summarize before we go into our first break, Michael. Just in this 15 minutes that we’ve been talking, you’ve been talking about two products. The CEOL or the claims expense outside limits, and the first dollar defense that I had never heard of and a lot of folks on this audience have probably never heard of and it’s just huge, huge value to them. The other thing that I pointed out to you is that the people who are listening to this I think more or less by definition are the better risks. These are folks who are looking to improve their businesses, always looking to learn more. So this information could be valuable to them. They should be asking their current provider of insurance product, the person who sells them professional liability insurance, A, if they have this, B, if not why not, and C, why haven’t you told me this before. And if they can’t provide it, they need to be shopping around. Is that sort of the upshot of it?
Michael Carroll: Sure. Amen, amen and amen, and I’ll even add in, if the answer is if they don’t have it, the answer I’ll add in is a shameless plug, call me. At the end of the day, do you want to do business with someone who’s considered to be, I mean that’s what we’ve earned. I sure as heck didn’t earn it on my looks, I can tell you that.
Christopher Anderson: Well, we’ll definitely give your contact information at the end of the show. But right now we’re going to roll into a break and then we’ll come back with Michael Carroll and be speaking a little bit more about other things you should know about your professional liability insurance. But right now, a word from our sponsor.
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Christopher Anderson: And we’re back with Michael Carroll. The topic is The Naked Lawyer, and Michael Carroll has been talking to us about some of the things you ought to have known and should know about your professional liability insurance. And the CEOL, the claims expense outside of limits and the first dollar defense are just huge, huge tips for us. But Michael, I wanted to turn the conversation now to other kinds of things that people should be – owners of small businesses, owners of law firms – should be looking at to protect themselves more on the casualty side. Some of the things that people may or may not be thinking of that insurance is available and they should be thinking of to protect themselves against. One of the things you talked about is premises and also data breach concepts. What do you have to tell the folks about that?
Michael Carroll: The majority of small law firms, single shareholder law firms that I meet via my marketing efforts or conferences and such. They don’t have any office business insurance. And the reason that is it logically is if I get it – and I’m not saying that critically – it’s a low dollar deal and I’ll even add in that people think he just wants to sell me some more insurance. Ladies and gentlemen listening, I get 15% commission. So when you talk about the average office business insurance, premium is around $700. Quick math, around %100 in commission after expenses. That is not life changing money for most people like myself included. So this isn’t about making more money. And yes, revenues add up, but this again is protecting you properly. So back to most small law firms, say I’m in a high rise, I’m in a big building in a downtown type area. What are the chances of a tornado or a fire happening and all of the above? The chances are very low, and they say I have a laptop, I take it home with me, there’s furniture furnished for me, or the furniture I have is cheap, I wouldn’t really worry about it, yet again the exposure’s low, and right down the line. That is understandable, I get it. So here are most small law firms without any office business insurance. But even those that do – and I’ll get into that shortly, but let’s start with those that don’t. The minimum premium for an office business insurance policy is $500 a year. That’s just what the insurance industry has said in the commercial insurance arena or space that we have to get that to make it worth our while to just print the paper, to get it out, what have you. And so you have some law firms that have that. They’ve got minimum $20,000 of business personal property. Furniture, computers, phone system, supplies. They may have a couple of employees and they figure 20 grand or 30 grand might cost you an extra 50 to 75 bucks a year and it’s very inexpensive and it’s written on the acronym as BOP, Business Owner’s Policy. And it’s a big money maker for the insurance industry; they love writing it. It’s main street business, whether it’s an insurance brokerage, an account office, a law firm, a law office, a law business, it’s great, great money for them. But again, for those who don’t have it, that’s certainly worth it. But the most important endorsement – now you should have, and this is where it gets fun, at least for me, is what is called data breach liability. That’s an endorsement that runs between 100 to 300 dollars a year. What is data breach liability? Well very simply put, if you paid attention to anything in the news that’s happened in the last year-
Christopher Anderson: Seriously, if you’ve been shopping or online or anything, this has been news everywhere.
Michael Carroll: Amen. And you saw it happen to Sony. If you can hack into Sony or Target or the IRS was hacked, come on, ladies and gentlemen. Those listening, my office and your offices, they could do it with their pinky finger while they’re eating Cheerios. It would be the useless thing in the world to do. Most people say, “I’ve got firewalls, I’ve got all these things set up.” Well not only does it include hacking into your system, but how about almost everyone? Going into an airport, I travel regularly. Christopher, I know you do. And lawyers, even going around town, but let alone an airport, everyone has a smartphone. Most people have a tablet, and or a laptop. And if you just lost those, or when you sit in an airport, do you understand that that’s a hacker’s paradise because you’re sharing a public Wi-Fi? I mean, they could get into that in a heartbeat. But the way the law reads in 49 of the 50 states, that if you have a data breach violation or occurrence, you are by law required to notify all current and past clients, a pass they’re not going to switch a ton on, but it says in the statute, you should notify certain clients that there’s been a data breach and they could be affected. If you have to write that letter yourself, most people aren’t even aware of that. Law firms, insurance brokers, accounts; any type of office, they aren’t even aware that law exists. If one of your clients’ personal information has been compromised because someone lost, you and or one of your employees lost their smartphone where they just had their Outlook or their email program on there where they got right in there and there was a social security number. Or you get hacked and they get into your server where they find all your stored files or your Cloud system gets hacked. If there’s personal information in there that gets compromised, you by law have to notify all current clients and when you and I right that letter, we would be mortified. We would write it emotionally. The run off on that, the studies have proven the run off on that is you would lose 30% of your book of business would run of you, saying, “What a moron, what kind of a run business is that? Holy crap, nice going.”
Christopher Anderson: Especially here. Law business is where one of our obligations under the model rules of professional conduct is preserving the confidences of our client. That’s one of the things that we’re supposed to do.
Michael Carroll: Correct, you got it. The insurance company not only writes that letter, but heaven forbid you get the client or the customer from hell and they get on TV or they get the local newspaper and the local news is slow and they say, “We couldn’t buy our new house.” They will do damage control in the media and if a lot of people were affected, they will take care of all of that. They’ll write the letter and they provide 12 months free credit monitoring. So not only is all of that included, if you did get named in a suit, defense costs are included along with any damages. You can purchase it in increments of 100,000, 250,000, 500,000 and a million; those are the four limits that are offered. And obviously, the more you purchase, the more it costs. But when you’re talking a quarter million dollars for that protection – depending on the size of your firm, you may need more, you may need less – but if it’s a hundred thousand, you’re talking like 100, $150 a year. Quarter million, 250, 300, half a million, 300 to 500 in a million. 750 maybe up to a thousand. But again, if you want that type of exposure, that offsets the revenues. It’s all relative to who you are. But that in of itself, that is not a stand alone policy per se. I’ll get into the kissing cousin here called cyber liability, and you can get that included as a stand alone. But for cyber liability, let me digress into that quickly. That’s if you have a big internet exposure. If you’re doing commerce on the internet – which most law firms do not – but if you’re a big video person on the internet, it’s important to have that because if somehow you were in front of Jimmy John’s or Domino’s Pizza or in front of a football stadium and you didn’t have the express written consent of them – or say you have a picture of Tom Brady in the background in your office because you’re a huge Patriots fan, or Derek Jeter because you’re a Yankee’s fan or whatever. And their people, Derek Jeter’s people, Tom Brady’s people, the Patriots, if you were in front of Gillette Stadium if that’s what it’s still called, or Ford Field. Ford can come back and say up in Detroit that you’re giving the impression that we the Ford Motor Company is endorsing your services. That’s where cyber liability comes into play. And included in the cyber liability is data breach, that it’s one and the same. But these again are items that it is my job, my peer group’s job, to at least advise you that these are the exposures that are out there and they’re not terribly expensive. But anyway, that’s a big deal where a lot of law firms hear that story and they’re like, “Woah, okay, we should definitely get the basic office business insurance at $500. Our exposure might be a quarter million, endorse that on for a couple of bucks a year. $700 very well spent.” Was I clear on that?
Christopher Anderson: Yeah, I think that’s great. The purpose of today’s show is to really get some education out there as to what questions we’re not asking, the things we’re not aware of, the things that we should be. And I know that because I don’t know if you know, but one of the talks I give around the country is on cyber security on law firms, and it always packs the house. Every time I give that talk, the room is standing because lawyers are really concerned about that and about what they need to be doing to protect their clients. But again, I’ve got to be honest. In my talks, I never have talked about how they can insure themselves against those risks. And in all my years of operating law firms, I’ve never heard anybody else talk about it, certainly not the people who are my trusted advisors to be providing that kind of information. My professional liability insurance or other liability insurance agents that I work with. So this has got to be revelation to a lot of folks online. So we’ve covered data breach, which the other thing I’ll tell you is that part of my talks that data breach is something not only that people are worried about, but that they should be. Because the hackers are going after -they’ve gotten the low hanging fruit – they’re going after the medium sized and the smaller law firms now because they’re the soft underbelly of the profession and they’re just more vulnerable. So this will be a huge thing for them to be able to protect themselves and their clients. It seems this protection really extends to giving their clients protections that they need should a data breach occur.
Michael Carroll: Yeah, you’re absolutely correct. The cyber liability again, the exposures there are worth to have. Video for those that are aggressive and growing their practice, video is king and there’s no greater way to drive traffic online. And people are looking online. They like reviews. Today everyone thinks Google is like a verb. Google is a company, but what do they say? Google it. And I mean it be like, Anderson it or Caroll it. Wouldn’t that be great if people said that? We would become a brand in and of our name. But it’s one of those deals where Google has become – as they say Google it versus search for it – but that’s the whole idea that people will go online looking for services if they’re not referred. And if you’re doing videos, that will drive you towards the top of the search engines and that’s where cyber liability. And that policy includes data breach, it is a standalone. Law firms can get those written with a million dollar limit for roughly $1,000 a year. And if you’re that kind of an aggressive marketer and what have you, that’s peanuts. It’s really out there. Very few companies write it. Most of my peer group don’t know anything about it, but I carry it because I’m a big video guy, I’m all over the internet. but my point is that I’ve had it. Those examples I gave you, I was in front of a pizza franchise and they sent me a cease and desist. It was no harm no foul, it was kind of laughable. I called the counsel and I said, “Really?” He said, “I know, I know, but that’s what I’m paid to do.” And I said, “Come on, man, really? Alright, fine, I’ll reshoot the freaking video,” and I did. But they could have been nasty about it and gone right to sue. And my intent was not to jar this pizza franchise that you know right away, and I’m not going to bad mouth them. But that’s how it works out there, there was an example of how someone-
Christopher Anderson: The bird is protecting their own.
Michael Carroll: Yeah, Brett Favre’s people; his camp, that’s public knowledge. Someone in the Green Bay Area, Milwaukee, wherever, had him in a background car dealership as I recall, and I read about it in an insurance industry magazine, and they went right to sue and they wound up getting a solid judgement. It was a lot of money and the car dealership, I don’t know if it put them out of business, per se, but it hit the bottom line big time. Brett Favre at the time was considered to be the man. But yeah, that’s why it’s important to have those things. At least know what your exposure is.
Christopher Anderson: So talking about knowing what your exposure is, we’ve only got a couple of minutes left and I want to just breach one more topic and then we’ll wrap things up. But it’s the middle of the Summer, actually the beginning of September, we’re heading into the teeth of hurricane season. We already had tropical storm Erika, which at one point was looking like it was going to be a category 2 or 3 storm hitting dead South Florida, and immediately as business advisor to several law firms, I’m getting calls from my clients in south Florida saying, “From a business perspective, what should we be doing to prepare for the storm? We do we do about the records? What do we do about business continuity?” Is there anything or are there any products they should be aware of that are available where they can get insurance against that kind of thing so that they can set up an alternative office so they could get back into operation and not lose a week or a month or a couple of months due to a bad storm or other event?
Michael Carroll: Absolutely, excellent question, and the answer is absolutely there is. We write for companies that specialize in running in South Florida. That is not by accident, they are few and far between. After Hurricane Andrew came through roughly 20 years ago, the insurance industry ran out of Florida. They all folded tends and left, I’m talking all the big boys. We’ll just start with Joe and Jane lunchpail car and home insurance. We’re talking State Farm, Allstate, Nationwide; they all pulled out and they’ve been very slow to come back in. Orlando, yeah, they’ll play a little ball in those areas because the exposure’s low. But Southeast Florida, the West coast, Miami. The Keys, obviously, Tampa and that. Anything that’s on the water, it’s not a matter of if it’s going to happen again, it’s a matter of when and how badly so. To answer your question specifically, you need to have the wind endorsement, which if you’ve got a strong Florida insurer, for example, Louisiana would be the same, they have the exposure along the Gulf Coast down there, Mississippi, Alabama, the same idea. But the insurer that includes the wind endorsement which is the big thing in the hurricane, then you would need a separate policy for flood insurance. That’s a big one there because of the storm surge and stuff, so that’s what you could do. Now the good news is that if you have those endorsements right there on your business owner’s policy which we’ve opened up this segment, you’ve got what is known as business income. So if you were shut down due to total or partial laws, you would be able to relocate while your place is being built. The cost to relocate to pay rent somewhere else because you have a legal contract with your landlord, you’ve got a year lease. And if the storm happens 2 months into it, your landlord isn’t going to say, “Oh, okay, we’re done.” He or she have the right to collect the remaining 10 months on that lease. So you’ll have to relocate somewhere and if you don’t have a regular office business insurance policy, which included is the business income and extra expense – the extra expenses get you relocated. But if you had to lay off employees, a couple of your hourly folks because you’re shut down for a week because it’s catastrophic in nature, people who are on an hourly basis tend to live paycheck to paycheck. You can’t just get them paid while you’re shut for a week or while business is slow or while there was an obvious down tick for your business. They’ll pay for that too, so it’s incredibly valuable protection to have. Therefore you don’t end up in a situation where mother nature – who wants to change mother nature to the success of your business? Those are things you can’t control and the definition of insurance. Transference of risk. You pay the insurance company. First of all, you get in a bet with someone like I am who knows what the heck they’re doing to protect you properly. Therefore, when these events that you can not predict or control – sure there are the what if you can predicted at some point, technology has helped with that. But you can’t stop it is what I’m saying. But in that case, what can you do if Hurricane Erika just turned out to just be a nasty storm. But say it will become Andrew 2 or Katrina like New Orleans experienced. You’re screwed, you’re done. That will put you out of business and you’ll become, as I like to say, one of the sad tales of my book, The Naked Lawyer. I changed the names and places to protect the innocent, but you don’t want to be one of those stories where you say, “Ooh, yikes, that could have been me,” and yeah, it sure could have. And that’s how you get away from that by being protected properly.
Christopher Anderson: Yeah. Well, Michael, thanks so much. I feel like we just scratched the surface and we’re out of time. I hope I’ll be able to convince you to come back on the show some time in the next year or so.
Michael Carroll: You better believe it. It was my pleasure, and Christopher, it’s always wonderful speaking with you. It’s a wonderful show and lawyers listening, I’m sure they get tons of value out of it. I always enjoy listening to it too, it was my pleasure. Thank you.
Christopher Anderson: Thank you, Michael, and that wraps up this edition of the Un-Billable Hour, the law business advisory podcast. Our guest today has been Michael Carroll. You can learn more about him at email, [email protected] or at his website at www.InsuringLawyer.com or www.InsuringLawyerBook.com or even at www.TheNakedLawyer.com. His Twitter address is @InsuringLawyer, and you could also find him on LinkedIn under Michael-Carroll. This is Christopher Anderson, and I look forward to seeing you next month with our guest, Marc Cerniglia of the newly renamed Spotlight Branding. We’ll learn how you can do a much, much better job of marketing by having hypotheses about what your return on investment should be and on how to track it so that you end up spending your marketing dollars smartly. Marc Cerniglia will be with us next month, and until then, remember that you can subscribe to all of the editions of this podcast at LegalTalkNetwork.com or on iTunes. Thanks for joining us and we’ll speak to you again soon.
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