2. NAVIGATING THE MINEFIELDS IN DISASTROUS PLI CLAIMS

3. MODERATOR: Gary R. Shendell, Esq., Managing Partner, Shendell & Pollock P.L. PANELISTS: Randy Johnston, Esq., Owner/Partner, Johnston Tobey, PC Eric D. Kaplan, Esq., Managing Partner, Kaplan Papadakis & Gournis, P.C. Gerald T. Merritt, Esq., President, The Hanover Insurance Group Jerry P. Roscoe, Esq., Mediator and Arbitrator, JAMS, the Resolution Experts Introductions

4. Common Characteristics of a Disastrous Professional Liability Claim Best Practices in Navigating Disastrous Professional Liability Claims Question and Answer Session Agenda

5. Common Characteristics in Disastrous Professional Liability Claims Theft or Fraud by the Insured Economy Drives Disastrous Claims Bankruptcy / Dissolution or Implosion of Insured Policy Limit Considerations Set-up for Bad Faith by Plaintiffs Counsel Discovery Hurdles Rogue Bad Actors Ethical Dilemmas for Defense Counsel Difficult Insured Personalities

6. Common Characteristics: Insured Horrific Conduct Conduct Involves Fraud, Conversion and/or Intentional Acts – Court Immediately Views Insured Negatively – Conflicts for Defense Counsel Related to Coverage – Multiple Defendants, Including Rogue Firm Member – Disciplinary Board Involvement – Possible Criminal Conduct – Impact on Firm Reputation

7. . Common Characteristics: Economically Driven Claims Customers Money Lost or Taken – Money Lost Increases Claim Voltage – Failed Business Transactions amongst Friends Increases Angst – High Expectations from the Economic Boom of the Mid-2000s

8. . Common Characteristics: Economically Driven Claims Suit for Fees Leads to Professional Liability Counterclaim – Carrier Will Not Pay for Fees for Pursuit of Claim – Insured Demanding Pursuit of Fees – Billing Difficulties of Defense Counsel

9. . Common Characteristics: Economically Driven Claims Easy Money Breeds Theft – Professional Firms Opening Ancillary Businesses in Unfamiliar Areas – Professional Firm Cannot Keep up With Overhead – Embezzlement of Client Funds

10. Common Characteristics: Firm Financial Issues Bankruptcy / Dissolution or Implosion of Professional Liability Firm – Malpractice Case Litigated in Bankruptcy Court – Court and Trustee Motivated to Collect Funds for Creditors – Insurance Proceeds Become Property of the Bankruptcy Estate – Trustee Seeking Fees from Liability Carrier – Lack of Access to Underlying Documents

11. Common Characteristics: Firm Financial Issues Losing Insured as Primary Contact – Trustee Stands in Shoes of Insureds Client – Loss of All Insured Contact People – Non-Cooperation Issues – Inability to Comply with Court Orders – Inaccessible or Destroyed Documents

12. Common Characteristics: Policy Limit Considerations Eroding Policy Limits – Deplete any Recovery in a Disastrous Claim Must Consider Exposures, Work Needed and Critical Mass Issues Insureds Position Toward Settlement Multiple Claims Drawing on Limits Requires Similar Analysis for All Claims

13. . Common Characteristics: Bad Faith Set-ups Standard of Care – Investigation – Insurance Company has Non-Delegable Duty – Communication with the Insured – Time Limited Demands Demand Made Prior to Any Investigation Unreasonable Release Language What If No Demand was Made?

14. . Avoidance Steps – Communication with Insured – Strategic Documentation – Proactive Investigation Common Characteristics: Bad Faith Set-ups

15. . Best Practices How to Best Represent a Thief – Absolute Honesty with Court Advise the Court of the Difficulties Involved with the Representation Explain Why You Cannot Comply with Discovery Obligations and Orders Courts Appreciate Honesty and Can Assist

16. . Best Practices How to Best Represent a Thief (contd) – When a Conflict Arises Rule 3.3 Sets Forth Mechanism for ex parte Discussion with Court Advise Client of Conflict and your Required Course of Action Court will Evaluate Whether to Advise Opposition of Details Buys Credibility and You Can Learn Courts Impressions ex parte Withdraw if Necessary

17. Best Practices Rule 3.3 Candor Toward The Tribunal (b) A lawyer who represents a client in an adjudicative proceeding and who knows that a person intends to engage, is engaging or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal. (c) The duties stated in paragraphs (a) and (b) continue to the conclusion of the proceeding, and apply even if compliance requires disclosure of information otherwise protected by Rule 1.6. (d) In an ex parte proceeding, a lawyer shall inform the tribunal of all material facts known to the lawyer that will enable the tribunal to make an informed decision, whether or not the facts are adverse.

18. Best Practices Early Case Assessment and Damages Evaluation – Engage Consulting Experts Early – Depose Plaintiff: May Be an Awful Witness – Consider a Mediation / Settlement Conference after Early Depositions – If Necessary, Admit Liability and Focus on Damages – See if Plaintiff is Willing to Pay to Litigate Claims

19. Best Practices Use Coverage and Indemnity Issues to Your Advantage – Defense Counsel Can Advise Plaintiffs Counsel that Any Victory is Likely Shallow – No Greater Disincentive to Litigate than a Lack of Coverage – Bring Carrier to Mediation / Settlement Conference, Including Coverage Counsel

20. Best Practices Alternative Dispute Resolution – Thoroughly Research Possible Mediators – Look for Mediators that are Not Afraid to Voice Their Opinion to Both Sides – Always Prepare Comprehensive Position Statements

21. Best Practices How to Best Diffuse an Explosive Insured Personality – Meet the Insured in Person when First Engaged – Set the Ground Rules Early in a Case – While Insured Input is Appreciated, Advise You are Responsible for Case Management – Avoid Too Many Cooks in Kitchen – Keep the Insured Informed and Discuss your Impressions Throughout Case – If Conflicts Develop, the Claims Administrator May Need to Intervene

22. Questions & Answers

23. Many thanks to … Randy Johnston Eric D.Kaplan Gerald Merritt Jerry P. Roscoe Gary Shendell