MANAGING A SMALL LEGAL PRACTICE - c.ymcdn.com · A. Leadership vs. Management 1. ... How you...

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MANAGING A SMALL LEGAL PRACTICE

CLE Credit: 2.0, including 1.0 Ethics Friday, June 21, 2013 8:30 a.m. - 10:40 a.m.

French Room Galt House Hotel

Louisville, Kentucky

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A NOTE CONCERNING THE PROGRAM MATERIALS

The materials included in this Kentucky Bar Association Continuing Legal Education handbook are intended to provide current and accurate information about the subject matter covered. No representation or warranty is made concerning the application of the legal or other principles discussed by the instructors to any specific fact situation, nor is any prediction made concerning how any particular judge or jury will interpret or apply such principles. The proper interpretation or application of the principles discussed is a matter for the considered judgment of the individual legal practitioner. The faculty and staff of this Kentucky Bar Association CLE program disclaim liability therefore. Attorneys using these materials, or information otherwise conveyed during the program, in dealing with a specific legal matter have a duty to research original and current sources of authority.

Printed by: Kanet Pol & Bridges 7107 Shona Drive

Cincinnati, Ohio 45237

Kentucky Bar Association

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TABLE OF CONTENTS The Presenters ...................................................................................................... i Lawyers as Leaders – Becoming a Superstar "Plan"ning to Succeed .......................................................................................... 1 " . . . And Here's the Top Ten!" Ethics and Malpractice Avoidance Guide ............................................................ 41

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THE PRESENTERS

J. Nathan Billings Billings Law Firm, PLLC

219 North Upper Street, Suite 200 Lexington, Kentucky 40507

(859) 225-5240 [email protected]

J. NATHAN BILLINGS is the managing partner and principal of Billings Law Firm, PLLC in Lexington. He received his B.A. from Centre College in 1996, his M.B.A. from Regent University School of Business in 1997, and his J.D. from Regent University School of Law in 2000. Mr. Billings is a former chair (2010-2011) of the Kentucky Bar Association Young Lawyers Division. He is a member of the Fayette County and Kentucky Bar Associations and the Fayette County Bar Foundation. Asa P. Gullett III Lawyers Mutual Insurance Company of Kentucky 323 West Main Street, Suite 600 Louisville, Kentucky 40202 (502) 568-6100 [email protected] ASA P. “PETE” GULLETT III is Chief Operating Officer for Lawyers Mutual Insurance Company of Kentucky and has been with the company since 1999. He received his B.A. from Centre College in 1968 and his J.D. from the University of Kentucky College of Law in 1971. From 1971 to 1999, Mr. Gullett was in private practice in Hazard, Kentucky. During that time, he served as Hazard City Prosecutor, Hazard City Attorney and was a member of the Hazard Independent School Board of Education from 1984 to 1999. Mr. Gullett was a member of the Perry County Bar Association, serving as President from 1972-1974, and is now a member of the Jefferson County Bar Association. Mr. Gullett is a member of the Kentucky Bar Association and served as a member of its House of Delegates from 1977 to 1983 and from 1990 to 1998, and served on the Board of Governors from 1983 to 1989. He is a member of the American Bar Association and a Fellow of the American College of Trial Lawyers. Mr. Gullett was the 2000 recipient of the Kentucky Bar Association Justice Thomas B. Spain Award for Outstanding Service in Continuing Legal Education. Mr. Gullett was awarded the Kentucky Bar Association’s Bruce K. Davis Service Award in 2008. He has been on the faculty of the New Lawyers Program since its inception, and was its Program Manager for several years. Mr. Gullett is also on the Board of the Kentucky Lawyer Assistance Program and is currently chairing the Board.

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LAWYERS AS LEADERS – BECOMING A SUPERSTAR "PLAN"NING TO SUCCEED

Reprinted with permission of Lawyers Mutual Insurance Company of Kentucky OVERVIEW OF TOPICS: I. Introduction II. The Business Side of Practice III. Professional Liability Insurance IV. Business Development V. Personal Growth and Development VI. Conclusion I. INTRODUCTION

A. Leadership vs. Management

1. Leadership – sets the direction and determines the destination. It's the hand on the tiller.

2. Management – Determines the efficiency and cost of travel. It sets

the sails and swabs the decks. 3. Relationship between leadership and management:

a. Without proper direction, you go to the wrong place. b. Without proper management, you may never get to your

destination, even if it is the right place to go.

B. Business Theory

1. The purpose of a business enterprise is to make money; therefore it is important to fundamentally understand what you get paid for, how you get paid, and associated costs.

2. The assumptions about what a company gets paid for is their

theory of business. a. Percentage of Plaintiff's recovery. b. Fee for services. c. High volume form based practice. d. Your basic theory will guide your business structure.

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3. How you conduct the business side of your practice will reflect as much about your character and ethics as does your practice of the profession.

II. THE BUSINESS SIDE OF PRACTICE

A. "A Guide to Setting Up and Running Your Law Office (Avoiding Malpractice through Efficient Office Systems)," published by the Oregon State Bar Association, can be found at http://www.lmick.com/_resources/ documents/resources/2009_a_guide_to_setting_up_and_running_your_law_practice.pdf. Many of the aspects of this section of the outline are based on their materials, of which I would refer to you for more detailed information.

B. Entity

1. Sole proprietorship. 2. Partnership. 3. PLLC. 4. PSC.

C. Budget

1. Key principle: Over budget expenses, under budget income. 2. Determine what you can afford.

a. Initial capital (equity vs. debt).

i. Minimize debt. ii. Debt structures.

(a) Fixed rate versus floating rate. (b) Term (three-seven years). (c) Guarantors.

b. Operating capital.

i. Maintain cash reserve (thirty-ninety days). ii. Establish a line of credit.

3. Major budget items (see checklist).

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D. Office Space

1. Client access and visibility versus prestigious address.

2. Lease versus ownership. 3. Building expenses.

a. Heating and cooling for old buildings. b. Repair and maintenance issues. c. Know your responsibilities under the lease. d. Know reputation of landlord.

E. Equipment

1. Basic equipment.

a. Computers. b. Copier/printer. c. Dictation.

2. Lease versus own. 3. Maintenance agreements.

F. Furnishings/Decor

1. Keep it simple (you can always upgrade). 2. Conversion of home furniture to office furniture. 3. Ergonomic products make a difference. 4. Clean versus clutter.

G. Supplies

1. Premium versus inexpensive. 2. Minimize waste.

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H. Library

1. Online research.

a. KBA's Casemaker. b. Westlaw. c. Lexus.

2. Books.

a. Civil Rules. b. Kentucky Revised Statutes. c. Caldwell's Kentucky Form Books.

3. Other resources.

a. Kentucky Practice Series. b. Seminar material (UK blue books). c. Law school libraries. d. Local bar libraries. e. Clerk's Office – other cases.

I. Miscellaneous

1. Bar dues/KBA/ABA services to solo practices. 2. Professional liability insurance. 3. Workers' compensation. 4. General liability, etc. 5. Employee benefits.

J. Staff (Your most important investment)

1. Hiring.

a. Personality. b. Intelligence. c. Work ethic.

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2. Match your strengths and weaknesses. 3. Technical skills. 4. Function.

a. Identify job function and expectations. b. Define the work process and how each person relates to

the end product. c. Communication/feedback/respect. d. Answering the phone/placing calls.

K. Operating Systems

1. Keep it simple. A system is only as good as the extent to which

you use it. 2. Calendar/tickler systems.

a. Paper versus computer (what works for you). b. Dual control.

3. Office organization.

a. A place for everything and everything in its place. b. Set up a flow chart for all major functions.

4. Planning.

a. Forecast thirty days ahead. b. Plan weekly. c. Daily to do lists. d. Designate a fixed time each week for planning purposes

and communicate the same to your staff. e. Don't let the immediate dominate the important.

5. Software options (Exhibit 1).

L. Billing methods

1. Contingent fees.

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2. Flat fees. 3. Hourly.

a. One-tenth of an hour (six minutes). b. One quarter of an hour (fifteen minutes). c. Hybrid.

i. The higher of a reduced hourly rate or a lower

contingent fee. ii. For higher risk cases for clients who can afford to

pay something.

4. Retainer fee. 5. Prepaid systems. 6. Rates.

a. Compare market prices (urban versus rural differential). b. Price to customer profile.

7. Billing and time keeping systems (Exhibit 1).

M. Collections

1. Retainer up front.

a. 100 percent up front. b. Percent of fee for each stage of case.

2. Monthly billing (always review every bill you send).

a. Late fees. b. Interest.

3. Credit cards. 4. Barter. 5. Attorney liens. 6. Rule of thumb, don't get so far behind with the client that you can't

afford to absorb the loss.

N. Management Practices

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1. "A lawyer's time and advise is his stock and trade," Abraham

Lincoln.

a. Keep track of all your time. It is your inventory. b. Time Management Book for Attorneys: A Lawyer's Guide

to Decreasing Stress, Eliminating Interruptions and Getting Home on Time by Mark Powers and Shawn McNalis.

c. Learn where your margins are. d. Do monthly reports on time and money. (Sample form,

Exhibit 2) e. Financial statements.

i. Monthly. ii. Annually.

f. Review and project cash flow monthly. g. Fiscal year versus calendar year for taxes. h. Hire a bookkeeper or CPA.

O. Money Management/Client Funds/IOLTA

1. Supreme Court Rule 3.130 (1.15); Rules for client escrow

accounts.

a. An attorney has a fiduciary duty regarding the safe keeping of funds for clients and third parties.

b. A lawyer is considered to be a trustee of the express trust

when handling a client's money. c. Duty can be delegated, but the responsibility cannot.

i. If your bookkeeper steals money from a trust

account, it is your debt to repay and your license on the line.

ii. Malpractice insurance does not cover you. iii. A second person should reconcile the account and

not the person who handles the deposits and writes the checks.

iv. The basic rule is trust, but verify.

d. Strict liability is the standard for breach of trust.

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2. Checking account management.

a. The law office must have a separate checking account. b. The escrow account must be a separate account. c. Any and all funds of third parties, including unearned attor-

ney fees must go to the escrow account. d. Payment out of the account is pursuant to client instruct-

tions, i.e., real estate closing or after funds are earned as documented by completion of work or bill statements with notice to the client.

e. Never co-mingle the firm's money with escrow funds or

vice versa. f. Never misappropriate client funds for lawyer's own use. g. An escrow account requires a separate account ledger,

which can be the check book register and bank statements for the account, but there must also be a separate client ledger which maintains all payments made and expenses incurred for each individual client.

3. IOLTA is interest on lawyers trust accounts.

a. 1986 Supreme Court Rule 3.830 requires that all clients'

funds be in two interest bearing accounts. b. Interest from these accounts are pulled and collected by

the IOLTA program. c. The IOLTA funds are managed by the Kentucky Bar

Foundation to finance grants for civil legal aid to the poor. d. You must give notice to the bank that the account is an

IOLTA account. P. Client Relations

1. The best referral source for business, and the best defense to

malpractice claims, is positive client relationships.

a. Respect.

i. Always remember that their case is more important to them than it is to you.

ii. Platinum rule, "Treat them as they want to be

treated."

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b. Communicate early and often, and in writing where a record of the communication is needed. i. Authority to take an action. ii. Clarification of instructions. iii. Communications should be systemic and on a

defined periodic basis. iv. You should touch every case at least once every

thirty days. While difficult to do, you should not go beyond sixty days.

c. Establish goals and expectations.

i. Prior to taking the case, always talk to your client

about what they want to achieve. Give them a range of options as to what you believe may or may not be possible, and have them acknowledge and buy into that range of options before taking the case.

ii. Never take the case of a client whose expectations

you do not feel you can meet, as you have just purchased a malpractice claim, if you do.

d. Screening clients.

i. Weigh the merits of the case. ii. Measure the demeanor of the client. Are they going

to be difficult to work with? Are they going to be high maintenance? Will they pay you?

iii. It is okay to say no.

e. Firing clients – within the ethical guidelines, you may

withdraw for various reasons.

i. If a client ever shows distrust or expresses sus-picions or doubt about your work, if the matter cannot be quickly resolved, then it is in your best interest to resign and turn the file back over to the client.

ii. Any client that puts you in a bad ethical situation

should be terminated.

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f. Engagement, disengagement and conflict of interest letters.

i. For every new client there should be an engage-

ment letter setting out:

(a) The matter for which you are being engaged;

(b) The terms and conditions of the engage-

ment; and (c) The consideration and method of payment.

ii. Any time you exit a case, a letter of disengagement

should be hand delivered or sent to the client by certified mail. Return their file and keep a copy of key file documents, if not the whole file.

iii. Conflicts happen every day. They can usually be

worked around with proper disclosures and wai-vers. However, if the conflict cannot be resolved, refer out of the matter.

g. Telephone calls.

i. Set up a procedure to monitor cold calls, etc.

(Exhibit 3) ii. Non-clients will always seek to try to get free advice

over the telephone, which should be avoided, if at all possible. If the case has merit, get them in for an appointment. This can be a free consultation, but unless they are prepared to come into your office, all you are doing is wasting your time and giving out free advice, neither of which you should do.

Q. Attorney Relations

1. Attorney relationships "Clients come and go, but attorneys are

around for a long, long time."

a. Always deal fairly and directly with your opponents and you will never have to worry about them having or trying to get even with you down the road.

b. In dealing with lawyers who are difficult:

i. Be professional; and ii. Do not take it personally.

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2. Prolonged arguments outside of court are of little value and break

down relationships. Just say the judge will need to decide. III. PROFESSIONAL LIABILITY INSURANCE

A. Malpractice Insurance

1. In today's world, the question is not whether you will be sued for

malpractice, but when.

2. The pace of practice has increased to the point that it makes it much easier to make mistakes. Client expectations now often exceed reality, and the lawyer will get blamed, because it is always someone else's fault.

3. Lawyers are viewed as deep pockets when something goes

wrong, even if it is not the lawyer's fault. 4. What it covers.

a. Defense costs. b. Errors and omissions in practice of law.

i. Missed deadlines. ii. Title errors. iii. Misapplication of the law. iv. Fiduciary duty to others in your capacity as an

attorney.

5. What it excludes.

a. Claims from abuse of process, etc. b. Claims from dishonest or deliberate wrongful acts. c. Claims against business enterprise (not insured) in which

attorney as direct officer or employee.

6. Type of coverage.

a. Policy covers claims made and reported during the policy period.

b. How much coverage.

i. Value of matters done in firm.

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ii. Type of matters done. iii. Value of attorneys personal assets. iv. Attitude for risk. v. Frequency.

c. Type of practice.

7. Mandatory insurance.

a. SCR 3.024 provides:

"If you practice in a limited liability entity or company, the entity must have proof of liability insurance or other form of financial coverage for acts, errors and omissions arising from the performance of legal services."

b. Minimum coverage is 50/100 for each attorney, with a

minimum coverage for the entity being $250,000 per claim and $500,000 for all claims in a year.

8. What does it cost?

Our smallest policy is 100/300 per claim, per year, and cost about $950 annually, with a $2,500 deductible and new lawyer discount. Premiums can be put on a payment plan.

9. What is Lawyers Mutual?

a. In 1986 the Board of Governors of the Kentucky Bar

Association established a committee to research the issue of why malpractice rates were soaring, and what solutions existed. The findings were that Kentucky, along with a number of other states, were paying for the very negative experience developed in California and New York.

The Board of Governors took it upon its self to develop an independent mutual insurance company known as Lawyers Mutual Insurance of Kentucky, based on the model that had been developed in North Carolina. The goal and purpose was to subsequently have Kentucky rates based on the Kentucky experience. The company raised three million dollars in capital and started in 1987.

b. The company currently has over twenty million dollars in

assets and over six and a half million dollars in surplus. We currently insure about twenty-five hundred attorneys and twelve hundred law firms. Our focus specialty is firms

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of five and fewer lawyers, though we represent firms with thirty plus lawyers.

c. Primary focus is Claims repair.

i. Unlike many carriers, the report of an incident or

claim will not automatically necessitate a rise in premium. We want to hear from our insured be-cause our staff can often repair a claim or resolve a problem before it results in litigation against the lawyer.

ii. If there is a claim filed, we work to resolve it as

quickly as possible, but are prepared to defend it to the hilt through trial and appeal, if it is the appro-priate thing to do.

10. Why Lawyers Mutual?

a. It is a company by Kentucky lawyers for Kentucky lawyers. b. You are not just a customer, you are a colleague. When

we help a colleague, we are helping ourselves, and the Kentucky Bar as a whole.

IV. BUSINESS DEVELOPMENT (NETWORKING, MARKETING AND BRANDING)

A. Marketing/Advertising

1. Kentucky Bar Association Advertising Committee (www.kybar.com).

a. Established through Supreme Court Rule 3.130 (7.01)-(7.60).

b. Commission's duties are to implement Rule 7 of the Ken-

tucky Rules of Professional Conduct. c. There are sixteen major regulations. d. Key concepts.

i. Ad advertisement is any information or communi-

cation containing a lawyers name or other identi-fying information to make known a lawyer's service.

ii. Items that do not need to be submitted:

(a) Business cards with name and contact

information; (b) A regularly published professional directory;

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(c) Office sign; and (d) Letterhead.

iii. All other ads must be submitted to the commission

for approval. (a) Mail three (3) copies to the commission. (b) If it's broadcast media, you need three (3)

typed transcripts.

iv. Fees.

(a) If an ad falls under SCR 3.133 (7.05)(1), there is no fee.

(b) If not, there is a $75.00 fee. Longer ads are

$100.00. (c) If ad is not submitted and it is discovered,

you will get a non-compliance letter, a $100.00 late fee and a $75.00 ad fee.

2. Contact personnel.

a. All advertisement submissions must be mailed to: Mary

Ellen Hardy, c/o Attorney Advertising Commission, c/o Kentucky Bar Association, 514 West Main Street, Frankfort, Kentucky 40601-1812. All checks payable for fees must be made payable to the Kentucky Bar Association.

b. Questions related to attorney advertisement, contact: Mary

Ellen Hardy, c/o Attorney Advertising Commission Paralegal, Telephone No: 502-564-3795 extension 241; Facsimile No: 502-564-3225; Email: [email protected]

3. Key marketing tools.

a. Web page. b. Telephone book.

i. Bold White pages.

ii. Yellow pages.

c. Business cards.

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d. Referrals.

i. You can ask for referrals from anyone, but you cannot give any consideration for a referral.

ii. Who to ask.

(a) Family and friends. (b) Other lawyers. (c) People who can direct business to you that

you want to do. (d) Court appointments.

iii. Civic involvement/charity work. iv. Articles on lawyer advertising (Exhibit 4).

4. How people choose their lawyer.

a. Referral. b. If it's a commodity item, a deed or basic will, price is

important. c. If it's complex, your expertise is important. d. If it's a fight, your reputation as a litigator counts.

5. Branding.

a. With few exceptions, branding a marketing image does not

apply to lawyers. b. Your reputation for quality work will ultimately be your

brand. V. PERSONAL GROWTH AND DEVELOPMENT

A. Stephen Covey, "Begin with the End in Mind" in 7 Habits of Highly Effective People, (Free Press, 1989).

1. Understand who you are now. Establish your base line.

a. Identify your strengths and weaknesses.

i. As a person. ii. As a lawyer.

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b. Ask others how you are viewed. What is your current reputation?

c. Personality test (i.e., Myers Briggs test helps us to

understand how others see us).

2. What do you want your reputation to be?

a. Specifically identify traits or characteristics for which you want to be known.

i. Some examples are academic, gladiator, problem

solver, etc. ii. Define your values (i.e., honest, generous, fair,

etc.)

b. It is important that you establish the values and principles upon which you are going to base your life in the beginning, and then apply those principles in your daily decision making.

i. All things are created twice.

(a) Mental creation/blueprint. (b) Physical application which is the building

process.

ii. Standards upon which we base our daily conduct overtime lay the cornerstones of our character and reputation.

3. In Principled-Centered Living, Covey states, "If we center our lives

on correct principles, we lay a solid foundation for our lives."

a. Principles allow you to stand apart from emotion and make objective decisions based on the values you embrace.

b. The principles you embrace always have the natural

consequences of their application.

B. "Successful people make important decisions early in life, and then spend the rest of their lives managing those decisions," John Maxwell.

1. How do we do this?

a. John Maxwell, author of the book Today Matters, made the

following points to be considered on this principle.

i. The secret of success is set by your daily agenda.

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ii. We do not manage time, we manage priorities.

(a) We tend to over value yesterday. (b) We over estimate tomorrow. (c) We under estimate today.

b. "Make Each Day Your Masterpiece," John Wooden.

2. Attitude is everything. How you see the world will color all you do.

a. Take responsibility for your actions. b. Don't blame circumstances or conditions for your behavior.

c. Behavior is a conscious choice based on your values

rather than the conditions or feelings you have at the time.

3. Take time for yourself and family. 4. You have to continue to get better or you fall behind.

VI. CONCLUSION

A. Success Equals Talent Times Work Ethic (S = T x W)

1. Malcolm Gladwell, in his bestselling book Outliers, looks at those elements of life that contribute to one's success.

a. An Outlier is defined as something that is situated away

from or classified differently from the main body.

b. In his book, he notes a number of factors that contribute to success. The most intriguing I wish to share with you is the ten thousand hour rule.

i. Studies show that preparation is one of the biggest

factors in measuring success. ii. Preparation is defined as time on task.

c. Studies show that Mozart, while a child prodigy, who

started composing at ten years old, did not complete his first masterpiece until age twenty-one. Based on the estimated time to write his work, he had approximately ten thousand hours of prior work before he did his first masterpiece at the age of twenty-one.

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d. It is estimated that most chess masters develop over ten years, during which period of time they have put in approximately ten thousand hours on the chess board.

e. The Beatles were formed in 1957, but did not burst upon

the world wide scene until 1964. Between 1960 and 1962, they honed their talents in Hamburg, Germany, by playing at strip clubs, using live rock-n-roll music to attract customers. During these stints, they played eight and ten hour shifts, seven nights per week. During an eighteen month period, they performed over two hundred and seventy nights.

2. Likewise, it takes at least five years to build a practice, and the

more time on task that you spend in your practice, will determine the level of your achievement.

B. Proper management of the business side of your practice will maximize

your return. Improper management will be an anchor that could sink your ship.

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EXHIBIT 1

Software Research – Time Keeping, Billing, Time Management, and Docket/ Calendar Management AbacusLaw http://www.abacuslaw.com/products/ Promotional Summary: Time, billing, trust accounting, general ledger, payroll, accounts payable & receivable, check writing, financial statements, plus fully integrated calendars, court rules, auto-fill court PDF forms, cases, conflicts, contacts, dockets, docs, emails, files, instant messages and more. AbacusLaw Gold: Enter data once and use it in every way possible. No more duplicate entries or needing to use multiple systems. Browse our site, schedule a live demo or call us today. Price: Quote request available online Amicus Accounting http://www.affinityconsulting.com/practice-solutions Promotional Summary: This powerful time, billing and accounting software package combines legal accounting and billing into one application. Billing Tracker Pro http://www.billingtracker.com/ Promotional Summary: BillingTracker Pro is time and billing software for attorneys in small firms (up to twenty-five users) and solo practices. BillingTracker Pro is easy to use, yet fully featured: Hourly, flat-rate, retainer, and contingency billing are standard. It also includes a built-in timer, accounts receivable, multiple reports, and professional invoicing – everything you need to manage your legal billing. Price: $179.00 Credenza (Works out of Microsoft Outlook) http://www.credenzasoft.com/overview.html Price: $9.95 per user, per month Gavel http://www.gavelsoftware.com/ Promotional Summary: Manage all aspects of a legal practice. Includes customer records, case management, time and billing, document management, expenses, invoices, payment tracking, reminders system, client server based on MS SQL Server, web interface for clients to follow their account, contact history, automatic billing system. Training videos will have you fully trained in thirty minutes. Telephone support is provided by a New York law firm. $100 per month, no initial outlay required. Customizable software. Price: $100 per month

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Tabs3 Billing Software http://www.tabs3.com/products/pricing_info.html Promotional Summary: The most award-winning software in the industry has been helping law firms bill smarter for over thirty years. Track your time, create statements, allocate payments, and run client status reports with just a few clicks. Get your bills out faster and increase your productivity. Order a free trial or sign up for a live demo today! Tabs3 Financial Software integrates with Tabs3 Billing Software to manage your law firm's finances and save you hours of data entry. Financial programs include General Ledger, Accounts Payable and Trust Accounting. Worldox http://www.affinityconsulting.com/practice-solutions/document-management-scanning-imaging/worldox Some 3,000 law firms and legal departments of every size and specialty use Worldox, making it one of the world's top legal document management solutions. Worldox has earned virtually every key award in the legal technology field, from Law Office Computing's Readers' Choice Award to TechnoLawyer's Favorite Document Management Solution; for four consecutive years it has won Law Technology News' Award for Document Management. Price: ~$400 PCLaw® Manages Your Practice, So You Can Practice Law http://www.lexisnexis.com/law-firms/practice-management/specialized-law/pclaw.aspx Promotional Summary: Powerful, Flexible and Easy-to-Use with a Thirty-Day Money-Back Guarantee PCLaw® 10 is an easy to use foundational solution for managing matters, helping ensure compliance with trust accounting rules, tracking time and expenses, billing, payroll and more. PCLaw is a flexible tool fine-tuned for law professionals, and is the most widely used practice management software in North America. Join 30,000 firms just like yours who trust PCLaw to manage their practice! Pricing for PCLaw starts at $950, but varies based on the number of licenses and add-on features, custom training, or support.

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EXHIBIT 2

Working Attorney Analysis Report Law Firm's Name

For the Month of XX, XX, 20XX

Attorney

Hours

Hours YTD

Fees Billed

Fees Billed YTD

Fees

Received

Fees Received

YTD Atty's Initials 2012

$ $

$ $

$ $

$ $

Atty's Initials 2012

$ $

$ $

$ $

$ $

Atty's Initials 2012

$ $

$ $

$ $

$ $

Total 2013 $ $ $ $ Total – 2012 $ $ $ $

DIFFERENCE FOR 2012-2013

TOTAL HOURS BILLED TOTAL FEES BILLED TOTAL FEES RECEIVED $ $

ww

w.lm

ick.

com

STATUS/ACTION REQUIRED:� Conflict check required: Completed ________________� Matter declined ________________________________� Letter of non-engagement required: Completed ______

Copy attached� Matter accepted ________________________________

� Follow-up call required: Completed ________________� Make office appointment: Completed ______________� E-mail correspondence attached� Copy this memo to office conflict check system� No action required

COLD CALL/E-MAIL/CASUAL CONTACT LOG

© 2010 Baach Creative Services, Inc.

1-800-800-6101 502-568-6100 502-568-6103 FAX

Date__________ Telephone � E-Mail � Casual Contact � Log #___________

CONTACT INFORMATION:

Name/Business Entity ______________________________________________________________________________

Address: __________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

Tel.#______________________________________________________________________________________________

Cell# ____________________________________________________________________________________________

Fax#______________________________________________________________________________________________

E-Mail Address: ____________________________________________________________________________________

OTHER PARTIES: (identify for conflict check)

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

SUBJECT: __________________________________________________________________________________________

MEMORANDUM FOR RECORD: (include facts, any legal advice given, disclaimers made)

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

__________________________________________________________________________________________________

� Letter of engagement required: Completed __________

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EXHIBIT 4

Article Research – Marketing, Networking, and Growing a Law Firm 1. "Marketing for Lawyers – Law Firm's Marketing Guide: How to Promote Your Law

Firm on the Internet http://www.hg.org/marketing.html This article is about utilizing the internet to market your law firm. It includes

advice on establishing a website, getting on Google maps, internet advertising, and social media.

2. "'Do-It-Yourself' Marketing for Small Law Firms" John O. Cunningham, August 2009 http://legalmarketingreader.com/small_firm.html Discusses ten different points to marketing a small-law firm, including: "know

your products," "set the right price," "promote your products," and "do client surveys."

3. "Growing Your Practice – Start Here, Start Now. Information and Strategies to

Promote Your Law Firm" Margaret Grisdela, 2007 http://www.hg.org/marketing-growing-practice.html Discuses "CLIENT Rainmaking" System, which translates the process of

acquiring new clients into "six simple steps." 4. "What Works and What Doesn't in Legal Advertising" Bruce W. Marcus, June 2010 http://www.lawjournalnewsletters.com/blog/bruce_marrow/153858-1.html Breaks down the steps to judging an ad that has been created for you –

"objective of an ad," "elements of a good ad," etc. 5. "Legal Marketing: Perfecting Your Elevator Speech" Paula Black http://www.articlesbase.com/networking-articles/legal-marketing-perfecting-your-

elevator-speech-2199062.html Discusses the importance of having your "elevator speech" perfected, this being

the short pitch you're able to make to give a great, if brief, first impression. 6. "Get More Results from Networking" Jim Hassett, October 2006 http://adverselling.typepad.com/how_law_firms_sell/2006/10/get_more_results.ht

ml Short article that includes questions to ask at a networking event.

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7. "Branding Your Law Firm – Information and Strategies to Promote Your Law Firm"

Margaret Grisdela, 2007 Discusses ways to achieve brand recognition, building your brand. 8. "A Lawyer's Social Networking Toolbox: Tuning Up Your Business Development" Rodney Dowell and Erik Mazzone, November 2009 http://www.abanet.org/lpm/lpt/articles/ftr11096.shtml You may or may not be interested in this one, but it focuses on how lawyers can

utilize Facebook, Twitter, and LinkedIn.

Application for Professional Liability Insurance Application Instructions The attached is for claims-made lawyers professional liability insurance. A claims made policy applies only to claims first made during the policy period or any extended reporting period. The limit of liability available to pay damages will be reduced and may be exhausted by claims expenses and claims expenses will be applied against the deductible amount. Please return the completed application and supplemental questionnaires to:

Lawyers Mutual Insurance Company of Kentucky Nancy Meyers

323 West Main Street, Suite 600 Louisville, Kentucky 40202

Telephone 502-568-6100 • KY Wats 1-800-800-6101 • Fax 502-568-6103 [email protected] • [email protected] • [email protected]

Please Read the Following Instructions Carefully to Avoid Processing Delays.

1. Please answer all questions completely. If you need more space, see “Other information” section on page 5 of

application.

2. Please attach a copy of your Firm’s letterhead (required).

3. Supplemental Application Form(s) must be completed if you answered “yes” to any of the following questions. If a question is not applicable (n/a) to your Firm then the principal of the Firm must sign, date, and check the n/a box at the top of each form. Completion of each form is required to process your application. YES N/A Question 21. Pertaining to Real Estate & Financial Institutions if you answered yes to the question(s) as a “Title Abstractor” and/or “Title Agent”: Complete Supplemental Application Form A

Question 22. Pertaining to SEC work: Complete Supplemental Application Form B

Question 23. Pertaining to mass tort or class actions: Complete Supplemental Application Form C

Question 37. Pertaining to claims or actions filed or made against the Firm or attorney(s). Complete Supplemental Application Form D

Question 39. Pertaining to prior incidents, errors, acts or omissions. Complete Supplemental Application Form D

4. Please note that the information you provide is on behalf of all lawyers and employees in your Firm.

5. New business applications will have an effective date no earlier than the date the application is received in

Lawyers Mutual’s office. DEDUCTIBLE OPTIONS

1. per claim - The deductible applies to each claim asserted during the policy period. 2. aggregate deductible - The deductible provides a cap for all claims asserted during the policy period.

However, the entire aggregate deductible could be applied to the first claim.

Thank you for considering Lawyers Mutual Insurance Company of Kentucky for this important coverage. Should you have any questions concerning the completion of this application, please contact:

Asa P. “Pete” Gullett, Nancy L. Meyers, or Lois A. Smith

Lawyers Mutual Insurance Company of Kentucky Waterfront Plaza • 323 West Main Street • Suite 600 • Louisville, Kentucky 40202

502-568-6100 • KY Wats 1-800-800-6101 • Fax 502-568-6103

NAME OF LAW FIRM: _______________________________________ Date: _________________________________ by ________________________________________________________ _____________________________________ Authorized Signature Print Name and Title

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Lawyers Mutual Insurance Company of Kentucky Attn: Nancy Meyers • [email protected]

323 West Main Street, Suite 600 Louisville, Kentucky 40202

Telephone 502-568-6100 • KY Wats 1-800-800-6101 • Fax 502-568-6103

Application for Lawyers Professional Liability Insurance Available Limits of Liability - Per Claim/Annual Aggregate Please Check Your Choice:

☐$100,000/$300,000 ☐$250,000/$750,000

☐$500,000/$1,000,000 ☐$1,000,000/$1,000,000

☐$1,000,000/$2,000,000 ☐$2,000,000/$2,000,000

☐$3,000,000/$3,000,000 ☐$4,000,000/$4,000,000

☐$5,000,000/$5,000,000

Available Deductibles: Please Check Your Choice

☐$1,000 ☐$2,500 ☐$5,000 ☐$7,500 ☐$10,000 ☐$15,000 ☐$20,000 ☐$25,000 ☐Other, $_________

Present policy expiration date (or effective date desired, if no prior coverage): _______________________________

1. Name of Firm:

☐ Individual ☐ Partnership ☐ PSC ☐ LLP ☐ PLLC ☐ Other ____________________

2. Primary Contact: 3. Year Firm Established:

4. Address:

City: State: Zip: Within City Limits? ☐ Yes ☐ No

5. Phone: Fax: Primary Contact E-mail:

6. Branch Office Address, if applicable:

7. Total Number of Lawyers in Firm: 8. Total Number of Non-Lawyer Employees:

9. Indicate the percentage of time (in total working hours) for each of the following areas of practice: (Must equal 100%)

Admiralty: Domestic Relations/Family Law: Money Management:

Anti-Trust/Trade Regulations: Entertainment Law: Municipal Law:

Banking: Environmental Law: Natural Resources:

Bankruptcy: Equine Law: Private Placement Memorandum: (Complete Supplemental Application Form B)

BI/PI Defendants: Estate Planning/Trust: Public Utilities:

BI/PI Plaintiffs: Estate Probate Administration: Real Estate: (Complete Supplemental Application Form A)

Class Action/Mass Tort: (Complete Supplemental Application Form C)

Foreign Practice: Securities (S.E.C): (Complete Supplemental Application Form B)

Collection/Repossession: Immigration Law: Social Security/Disability:

Communications: International Law: State Law Securities: (Complete Supplemental Application Form B)

Copyright/Patent/Trademark: Labor/Employment Law: Taxation:

Corporate/Business Organization: Litigation (General Civil): Workers Compensation/Defendants:

Criminal: Mediation/Arbitration: Workers Compensation/Plaintiffs:

Other, Please Describe:

10. Indicate the Firm’s annual gross billing category for the fiscal year preceding this application’s date (please check).

☐$0-$50,000 ☐$50,000-$100,000

☐$100,000-$250,000 ☐$250,000-$500,000

☐$500,000-$1,000,000 ☐$1,000,000 or more

11. Does 10% or more of the Firm’s working hours come from one client account or a group of related client accounts? ☐ *Yes ☐ No *If yes, please describe the type of services provided and your relationship with client. ____________________________________

TR��LM

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12. Name all lawyer(s) and indicate the following:

Name of Lawyer and Email: 1.





KY Bar Admit Date & Bar Number:

NOTES

License in Other State(s) *Y/N:*If yes, denote state(s), bar admit date(s), bar number(s) and % of business

Position in Firm:Sole Practitioner, Partner, Shareholder, Associate, Contract Attorney, or “Of Counsel”:

Part Time *Y/N:*If yes, denote hours per week

Incidental Practice *Y/N:* If yes, denote hours per week

Received 20 CLE Credits in Preceding KBA Year? Y/N:

Public Official *Y/N:*If yes, describe position & denote if you want coverage

Entered into any contract or agreement, oral or written, guaranteeing the result of any professional service rendered by him/her or any person under his/her supervision? *Y/N:*If, yes explain circumstances:

Treated for alcohol or substance abuse? *Y/N*If yes, provide a course of treatment:

Convicted or pleaded guilty or no con-test to criminal offense involving moral turpitude or which constitutes a felony? *Y/N:*If yes, explain circumstances:

Serving as a director, officer, trustee, partner, or employee of any client? *Y/N:*If yes, name the client and the position served

Have any fiduciary responsibility to or possess any ownership in any client? *Y/N:*If yes, name of the client:

Firm History 13. List the names of all firms of which the assets and liabilities of the former firm have been acquired by your firm.

Name of Firm Name of Firm Name of Firm

Year Established

Number of Lawyers

14. Has the name of your Firm changed within the past five years? ☐ *Yes ☐ No *If yes, list the name(s) of firms used.

Management of the Firm 15. If you are a sole practitioner, you must provide the name of the lawyer(s) with whom you have an agreement to be

responsible for your practice when you are absent for an extended period of time (eg., vacation, illness, etc.).

16. Does the Firm share its office or expenses with any other lawyer, law firm, or organization? ☐ Yes ☐ No

A. Does the Firm and any such person or organization share the same letterhead? ☐ Yes ☐ No

B. Is there a work-for-space arrangement? ☐ Yes ☐ No

C. If the other organization is a firm of lawyers, are there any case sharing arrangements? ☐ *Yes ☐ No (*If yes, indicate the carrier and amount of professional liability insurance carried by such organization and describe any contractual arrangement that would affect the applicant’s liability in the event of a claim with respect to such case sharing arrangement.)

17. Does the Firm maintain a conflict of interest screening system? ☐ *Yes ☐ No *If yes, what methods are employed?

☐ Index File ☐ Computer ☐ Conflict Committee ☐ New Client Review Meeting

18. Are any procedures in place to ensure that a lawyer is not overloaded with work? ☐ *Yes ☐ No *If yes, explain:

19. Does the Firm use a formal or informal new client screening procedure to review fees, case merit, or client attitudes prior to case acceptance? ☐ Yes ☐ No

20. Does the new client screening procedure include formal engagement, non-engagement, and disengagement letters? ☐ Yes ☐ No

Other Information 21. Please indicate whether the Firm is engaged in any of the following activities by checking “yes” or “no”. If yes, please

indicate the percentage of total working hours devoted to each activity and whether or not separate professional liability insurance is carried for this work.

a. *If yes, to “Title Abstractor” and/or “Title Agent” below, complete the Real Estate & Financial Institutions Supplemental Application A.

Type of Activity YES NO Total Working Hours Devoted to Each

Professional Insurance Carrier Expiration Mo/Day/Year

Insurance Agent

Accountant

Real Estate Broker

Title Abstractor*

Title Agent*

22. Is the Firm involved with any Securities and Exchange Commission work? ☐ *Yes ☐ No a. *If yes, please complete the SEC Supplemental Application Form B.

23. Is the Firm involved with any mass tort or class action cases? ☐ *Yes ☐ No a. *If yes, please complete the BI/PI Supplemental Application Form C.

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Time Docket and Record Control Systems Please answer all questions by checking “yes” or “no” as appropriate.

YES NO

24. Does the Firm use a formal system for record retention and control?

A. Does the system used identify how long records should be maintained?

B. Does the file system used separate inactive files from active files?

C. Are inactive files closed and archived on a regular schedule?

D. Are archived files destroyed after a certain number of years?

If yes, for how many years:____________________

25. Do you have a written policy for the operation of the Firm time/docket control system?

26. Does each attorney in the Firm understand and use the time/docket control system?

27. Is the Firm’s time/docket control system:

A. Calendar

B. Diary

C. Tickler system with notice slips

D. Operated on a computer

28. Does the Firm’s time/docket control system provide that all dates be entered immediately?

29. Does the Firm’s time/docket control system note statutes of limitations and procedural deadlines?

30. Do the Firm’s employees enter all appointments on the Firm’s time/docket control system, to include other personal and professional commitments?

31. Does the Firm’s time/docket control system have a procedure for verification of the completion of docketed events?

32. Are the Firm’s time/docket control system records maintained in a central location in the office?

33. Does the Firm’s time/docket control system use more than one independent control (e.g., attorney and secretary each maintain a calendar of the attorney’s commitments)?

34. Does one person in the Firm have primary responsibility for the operation of the time/docket control system?

35. Is there a person with secondary responsibility who can maintain and explain the time/docket control system if the primary person is absent for an extended period of time?

36. If question(s) 24 - 35 are not applicable, please provide an explanation.

Claims 37. Within the past seven years, has any professional liability claim been asserted, action filed, or claim paid against the

current Firm, predecessor Firm, or a lawyer listed in Question 12? ☐ *Yes ☐ No *If yes, complete a Claim Report Form (Supplemental Application Form D) for each such claim or action.

38. Has any lawyer listed in Question 12 ever been reprimanded, censured, disciplined by, refused admission to practice, disbarred, or suspended (including voluntary suspension) from practice by any bar association, court, administrative, or regulatory agency? ☐ *Yes ☐ No

*If yes, please explain circumstances.___________________________________________________________________________

39. Does any lawyer listed in Question 12 know of any present or prior incident, error, act, or omission which could result in a professional liability claim against the Firm or any lawyer listed in Question 12 or Firm listed in Question 14? ☐ *Yes ☐ No *If yes, complete Claim Report Form (Supplemental Application Form D) and attach a copy of the notice that was sent to the insurance carrier involved.

40. Has any lawyer listed in Question 12 or any Firm listed in Question 14 had any insurance company cancel, decline, or refuse to renew professional liability insurance? ☐ *Yes ☐ No

*If yes, please explain circumstances. __________________________________________________________________________

_____________________________________________________________________________________________________________________________________________________________

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Previous Insurance (Must include complete insurance information to obtain prior acts coverage.) 41. Has any lawyer listed in Question 12 or Firm listed in Question 14 ever been insured by another carrier? ☐ *Yes ☐ No *If yes, please list lawyers professional liability insurance carrier for each of the past seven years. If none, state “none.”

Insurer Name Policy Number Limits of Liability Deductible (if any)

Policy Period

Coverage Basis Claims Made/ Occurrence

Other information:

The undersigned is authorized to sign this application on behalf of all persons in the Firm to be insured and declares to the best of his/her knowledge and belief that the information provided in this application, and attachments, is true and no material facts have been misstated or withheld. The information provided in this application shall be the basis of the policy of insurance and deemed incorporated therein. The applicant understands that any misrepresentation or false statement on this application or attachments may result in loss of coverage under any policy issued by Lawyers Mutual Insurance Company of Kentucky. Signing this application does not bind the Firm or Lawyers Mutual Insurance Company of Kentucky to issue a policy of insurance. In accordance with KRS 304.47-030, Lawyers Mutual Insurance Company of Kentucky must give the Firm the following notice in your application for insurance. Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance containing any materially false information or conceals, for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime.

NAME OF LAW FIRM: _______________________________________ Date: _________________________________ by ________________________________________________________ _____________________________________ Authorized Signature Print Name and Title

Important Reminder: Report any claims against the Firm or incidents that might result in a claim against the Firm or any attorney to the present

insurance company before its policy expires. Failure to do so may result in a loss of coverage.

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Supplemental Application Form A Real Estate & Financial Institutions

If the Firm does no Real Estate work, check here and sign: Not Applicable ❏ Authorized Signature Name of Law Firm:

Real Estate 1. What percentage of the Firm’s real estate practice is devoted to: (Total must equal 100%):

A. Residential (1-4 family units): ___________% B. Commercial: ___________%

2. What percentage of the Firm’s real estate practice is devoted to: (Total must equal 100%)

A. Title Work/Closings ___________% D. Limited Partnerships/Syndications ___________%

B. Landlord/Tenant ___________% E. Condominium Formation/Conversions ___________%

C. All other___________%

3. What is the approximate number of closings and title work assignments performed annually by the Firm?:___________

Average Property Value Range in Value Low/High

Number

A. Residential $ $ - $

B. Commercial $ $ - $

4. When the Firm is conducting or attending a closing and is holding the closing funds for disbursement, who prepares and/or signs the checks for disbursement? ☐ Lawyer ☐ Employee ☐Paralegal ☐ Other/Identify_________________

5. When the Firm is conducting a closing and is responsible for completing the HUD forms and/or disbursing the funds, who signs the HUD forms and disburses the checks for the expenses such as fees, taxes, mortgages, liens, etc. required by HUD to be paid? ☐ Lawyer ☐ Employee ☐Paralegal ☐ Creditor ☐ Other/Identify________________

6. In questions 4 and 5, does the Firm ever delegate to anyone, who is not an employee or member of the Firm, any responsibility for preparing the checks, disbursing them, and/or signing the HUD forms? ☐ *Yes ☐ No *If yes, please describe the circumstances and who is allowed to do so. ______________________________________

7. When the Firm examines title to real estate and/or issues title opinions, the actual examination is done by: (Check all that apply): ☐ Lawyers ☐ Paralegals ☐ Other employees ☐ Third parties/Independent contractors Please describe the training and experience of all non-lawyer employees and/or third parties/Independent contractors doing title examinations for the Firm.

8. Does the Firm outsource title examinations to non-lawyer entities such as title examiners, freelance paralegals, or others? ☐ *Yes ☐ No ☐ N/A, Firm does not do any title searches *If yes, please identify the persons or entities and the approximate number of titles given each entity on an annual basis.

NAME APPROX. NUMBER

9. Does the Firm obtain and update proof that these individuals or entities (listed in question 8) have and maintain errors and omissions insurance in case they make a mistake? ☐ Yes ☐ No

*If Yes, Number Done Annually

10. Does the Firm’s real estate practice include limited partnership formation? ☐ *Yes ☐ No

11. Does the Firm’s real estate practice include syndications? ☐ *Yes ☐ No 12. Does the Firm’s real estate practice include providing opinions for limited partnership

formation or syndication? ☐ *Yes ☐ No

IF THIS FORM DOES NOT APPLY,

CHECK THE BOX AND SIGN AND DATE.

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Supplemental Application Form A – Real Estate & Financial Institutions – Continued

Financial Institutions 13. Identify all financial institutions any lawyer in the Firm has represented in the past five years and the type of work

performed for each:

Name of Institution Type of Work Performed

14. If the Firm does foreclosures, does another lawyer in the Firm attend the foreclosure sale, or does the Firm assign this task to local counsel if out of the Firm’s immediate area? ☐ Attend all sales ☐ *Obtain local attendance

a. *If other counsel is obtained, does the Firm obtain proof of the other counsel’s malpractice coverage to protect the Firm in the event the other counsel misses the sale or fails to properly carry out instructions? ☐ Yes ☐ No ☐ Sometimes

15. During the past five years has any lawyer represented any financial institution which has become insolvent? ☐ *Yes ☐ No *If yes, name the financial institution(s):

Name of Lawyer Financial Institution Position Held

16. Is any lawyer in the Firm a director or officer in any financial institution or does any lawyer own, personally or beneficially, five percent or more of the stock in any financial institution? ☐ *Yes ☐ No *If yes, name the financial institution(s):


17. Does any lawyer serve on a loan committee or act as general counsel for a financial institution? ☐ *Yes ☐ No *If yes, name the financial institution(s):


18. If the answer to Question 16 or 17 is yes as to any lawyer in the Firm, does that lawyer serve as a member of such

loan committee or as general counsel or provide advice or opinion with respect to legal lending limits or the quality of collateral? ☐ Yes ☐ No

19. Does any lawyer perform legal work for both the borrower and the financial institution simultaneously with respect to any real estate transactions? ☐ *Yes ☐ No *If yes, what steps are taken to avoid a conflict of interest?

20. Does the Firm or any attorney own a title company? ☐ *Yes ☐ No

*If yes, please denote the name of the title company?

I understand that the information submitted herein becomes a part of the Application for Lawyers Professional Liability Insurance and is subject to the same representations and conditions. NAME OF LAW FIRM: _______________________________________ Date: _________________________________ by ________________________________________________________ _____________________________________ Authorized Signature Print Name and Title

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Supplemental Application Form B Securities & Exchange Commission

If the Firms does no SEC work, check here and sign: Not Applicable ❏ ________________________________________________ Authorized Signature

Name of Law Firm:___________________________________________________

Indicate whether the Firm or any Lawyer has acted in any of the capacities enumerated below in the past two years and the estimated “allocation” of time during the most recent calendar year, fiscal year, or 12 month period: (Must equal 100%.)

CAPACITY ALLOCATION 1. Bond Counsel: % 2. Private Placement:

A. as counsel for underwriters: % B. as counsel for issuer: % C. as counsel for security holder(s): %

3. Public Offerings of Securities: A. Securities registered under the Securities Act of 1933:

1) as counsel for underwriters: % 2) as counsel for issuer: % 3) as counsel for security holder(s): %

B. Offerings exempt from registration under the Securities Act of 1933: 1) as counsel for underwriters: % 2) as counsel for issuer: % 3) as counsel for security holder(s): %

YES NO C. Does the Firm prepare, review, approve, or take part in the drafting of any private placement memorandum?:

4. Representing clients as to compliance with proxy requirements (other than in mergers) and reporting requirements under Securities Exchange Act of 1934:

%

5. Takeovers and other acquisitions of publicly held companies (including roles as special local counsel): A. where client was bidder or acquiring company in contested acquisition: % B. where client was bidder or acquiring company in friendly acquisition: % C. where client was target company in contested acquisition: % D. where client was target company in friendly acquisition: %

6. Securities (judicial or administrative): % 7. Other (please describe): %

_________________________________________________________________________________ _________________________________________________________________________________

TOTAL: %

8. What steps does the Firm take to satisfy “due diligence” requirements under Federal and State Securities acts? ____________________________________________________________________________________________ ____________________________________________________________________________________________

9. Has the Firm (including any predecessor Firms), or any present partner of the Firm (or any of its predecessor Firms), been subject to any disciplinary proceeding before the SEC or State Securities authorities within the past ten years? *If yes, give full particulars on Firm letterhead.

*YES NO

10. Is the Firm representing any client in any litigation in which the issues involve any Federal or State Securities work handled by the Firm (including the adequacy of registration statements, official statements, proxy statements, or tender offer documents)? *If yes, give particulars on Firm letterhead.

*YES NO

11. Do any partners of the Firm serve as directors or officers of corporations that are clients of the Firm and which have publicly held securities outstanding? ☐ *Yes ☐ No *If yes, please list below.

Name of Lawyer Corporation Position Held

I understand that the information submitted herein becomes a part of the Application for Lawyers Professional Liability Insurance and is subject to the same representations and conditions.

NAME OF LAW FIRM: _______________________________________ Date: _________________________________

by ________________________________________________________ _____________________________________ Authorized Signature Print Name and Title



35

Supplemental Application Form C Class Action/Mass Tort

If space is insufficient to answer any question, please use Applicant letterhead. Please answer all questions completely.

If the Firm does no Class Action/Mass Tort work, check here and sign: Not Applicable ❏ ________________________________________________ Authorized Signature

Name of Law Firm:___________________________________________________

1. Please complete the following for all attorneys in the Firm who are involved in class action/mass tort suits plaintiff or defense.

Name of Lawyer Number of Years Litigation Experience

Number of Fees less than $50,000

Number of Fees more than $50,000

2. What is the average dollar amount of awards, judgments, and settlements in class action/ mass tort cases handled by the Firm?

$

3. What percentage of claims/suits that you handled each year are concluded by: (Total must equal 100%) a. Settlement prior to filing suit:__________% b. Settlement after suit:________________% c. Trial/Verdicts: ____________________% d. Other: __________________________%.


NAME OF LAW FIRM: _______________________________________ Date: _________________________________

by ________________________________________________________ _____________________________________ Authorized Signature Print Name and Title



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Supplemental Application Form D Claim Report Form

If this form is not applicable, check here and sign: Not Applicable ❏ ________________________________________________ Authorized Signature Name of Law Firm:_______________________________________________ Application Instructions - Please type or print. 1. Complete one form for each claim or incident. 2. If space is insufficient to answer any question fully, attach separate sheet. 3. Answer all questions completely.

Claim Information 1. Full Name of Firm: 2. Policy Number:

3. Full name of Individual(s) of Firm involved in the claim and e-mail address:

4. Full Name of Claimant:

5. Indicate whether: ☐ Incident ☐ Claim/Suit

6. Date of Alleged Error (mo-day-yr): 7. Date of Claim (mo-day-yr):

8. Additional Defendants:____________________________________________________________________________

9. If Closed: Total Loss Paid Including Deductible: $_____________________ Indicate whether: ☐ Court Judgment ☐ Out of court settlement

10. If Pending: Claimant’s Settlement Demand $_________________ Defendant’s Offer for Settlement $_____________Insurer’s Loss Reserve* $____________________ Deductible $ ____________________

Is claim in suit? ☐ Yes ☐ No *Information may be obtained by requesting a loss run from Insurance Company

11. Description of claim (provide enough information to allow evaluation):

A. Alleged act, error or omission upon which Claimant bases claim:

B. Description of case and event:

�. Description of the type and extent of injury or damage allegedly sustained:

12. Provide name of insurance company to which this claim was reported and the date reported:


In accordance with KRS 304.47-030, Lawyers Mutual Insurance Company of Kentucky must give the Firm the following notice on claim report forms. Any person who knowingly and with intent to defraud any insurance company or other person files a statement of claim containing any materially false information or conceals, for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime.

NAME OF LAW FIRM: _______________________________________ Date: _________________________________ by ________________________________________________________ _____________________________________

S



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CHOOSING THE RIGHT AMOUNT OF COVERAGE Sallie Jacobs Stevens

How much professional liability insurance coverage should a firm purchase is a question we are frequently asked. While only you can evaluate your tolerance for risk and factor in considerations such as the value of the personal assets of members of the firm, we can offer several suggestions that will help in making your decision: � Consider the monetary value of matters handled by your firm. Average dollar

value can be misleading because there is no guarantee that a loss payment won't exceed the average value of your firm's representations. Consider the potential damage to your firm if a claim arose from your firm's biggest case. Many lawyers use this worst-case scenario when choosing limits rather than the firm's average exposure. Risk adverse lawyers often use a multiple of two or three times the highest loss they can anticipate in selecting policy limits.

� Determine whether your firm's practice concentrates in areas of law that have a

high frequency of claims. Loss experience studies identify plaintiff personal injury cases and real estate matters as the areas with the highest frequency of claims. Practice areas with high but somewhat lower claims probability are business transactions, family law, collection and bankruptcy, workers' compensation, and estate planning. All other areas have relatively low claim exposure. In Kentucky, we are seeing an increase in bankruptcy, workers' compensation, estate and probate, and family law claims. Note that over-diversifying your practice into a number of relatively claims-free areas may result in a greater malpractice exposure than concentrating in areas with higher claims frequencies.

� Take into consideration the personal assets of the attorneys in the firm when

selecting limits. If personal assets are substantial, higher policy limits may be desirable even though the firm's practice has low exposure to malpractice claims.

� Consider the number of attorneys to be covered under the policy. Frequency of

claims increases in direct proportion to increases in the number of attorneys in a firm.

� Evaluate the firm's attitude toward risk:

� Does your firm have an active risk management program? � Are you confident of your docket work control, conflicts check, filing, and

mail handling procedures? � Does your firm have a good record of providing legal advice in a careful,

responsive manner? � Do you provide risk management training for new attorneys and staff?

40

� Consider the risk tails that may exist for your firm's areas of practice. The risk tail is the time between when an error is made and the claim is asserted. For example, real estate claims have long risk tails because errors are typically not discovered until the properties are resold – usually a number of years later. Similarly, estate and probate claims have long risk tails. A long risk tail means that claims are more costly because of inflation. In these circumstances, higher insurance limits are warranted for inflation protection.

� Keep in mind that defense and other claims costs are included in the limits of

coverage of many lawyer liability policies, including ours. Defense costs vary with each claim, depending upon the complexity of the claim. These costs can erode policy limits substantially before a claim is finally paid. In choosing policy limits, consider both indemnity and defense expense.

� Understand the requirements of a Claims-Made and Reported policy, the policy

form used by virtually all providers of lawyers' liability insurance and the one we use. "Claims-Made" means that the policy and limits in effect at the time the malpractice claim is first made against the lawyer covers that claim-not the policy and limits in effect at the time of the conduct giving rise to the claim. Increasing limits as a firm's malpractice exposure grows over the years should be considered to protect against several claims from prior years' representations being asserted in the current policy year.

� Review your firm's malpractice exposure annually, well in advance of your

policy's renewal date. Compare the cost of the limits option you think you should have with the next highest option, and evaluate the cost of a lower versus a higher deductible. We can easily provide you with several alternative premium quotes to assist you in your analysis. Just give us a call and we will be glad to give you all the information you need to make an informed decision on your best coverage.

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"…AND HERE'S THE TOP TEN!" ETHICS AND MALPRACTICE AVOIDANCE GUIDE

Asa P. Gullett III Revised April 2012

I. INTRODUCTION

"Top Ten" lists seem to be more popular than ever, perhaps because they appeal to our need to receive reliable information in a format that we can digest quickly as we rush through our hectic lives. Accordingly, with USA Today as our model and David Letterman as our muse, we hereby break with all grand traditions of subtle and sophisticated ethics analysis and offer a few simple lists that speak volumes to any lawyer who wishes to avoid malpractice claims and Bar complaints. So … from the home office in Frankfort (as Letterman might say), we are proud to present:

II. TOP TEN WAYS TO AVOID MALPRACTICE AND MISCONDUCT

10. Be Mindful of How Your Practice Setting Affects Your Risk of Receiving a Malpractice Claim.

Areas of Law Most Likely to Generate a Malpractice Claim:

LMICK1 LMICK2 LMICK3 2007 Area of Law 2011 2010 2009 ABA Study Personal injury (for plaintiff) 24% 23% 26% 21.56% Real estate 21% 21% 30% 20.05% Collection & bankruptcy 10% 10% 6% 7.27% Workers' comp 6% 6% 7% 2.02% Estate, trust & probate 8% 8% 7% 9.68% Family law 7% 7% 11% 10.33% Criminal law 4% 3% 3% 5.08% Corporate & business org. 3% 4% 2% 4.94% Labor law 3% 3% 2% 1.41% Personal injury (for defendant) 2% 2% 1% 2.93%

1 Lawyers Mutual Insurance Company of Kentucky. 2 Lawyers Mutual Insurance Company of Kentucky. 3 Lawyers Mutual Insurance Company of Kentucky.

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9. Be Mindful of How the Stage of the Case Affects the Risk that You Will Do or Fail to Do Something that Becomes the Basis of a Malpractice Claim.

When an Error Is Likely to Occur during Various Stages of Case Development

2007 2003 1999 Stage of Case ABA Study ABA Study ABA Study Preparation, filing of documents 25.51% 23.08% 25.24% Pre-trial, pre-hearing advice 11.29% 19.47% 8.18% Commencement of action 17.32% 15.59% 15.66% Advice 12.68% 15.07% 6.79% Settlement/Negotiation 7.67% 8.20% 6.38% Trial or Hearing 5.56% 5.07% 5.10% Title Opinion 5.21% 4.03% 13.01% Investigation/Other than Litigation 6.04% 2.19% 16.26% Appeal Activities 2.36% 2.15% 1.11%

8. Be Mindful of How the Nature of Your Task Affects the Risk that You Will Do or Fail to Do Something that Will Result in a Malpractice Claim.

Activities at Issue in Malpractice Claims Presented to LMICK during 2009, 2010

and 2011:

2009 2010 2011

Activity %Total %Total % Total Commencement of action or proceeding 24.81% 24.60% 24.84% Pre-trial or pre-hearing 13.06% 13.37% 13.62% Consultation or advice 7.94% 7.65% 7.43% Settlement and negotiation 10.32% 10.40% 10.44% Title opinion 10.68% 10.68% 10.67% Prepare, transmit or file document (other than pleading) 12.59% 12.81% 12.41% Trial or hearing 4.61% 4.62% 4.55% Written opinion (other than title) 1.57% 1.65% 0.62% Tax reporting or payment 1.28% 1.21% 1.181% Post-trial or hearing 4.46% 4.51% 4.58%

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7. Be Mindful of the Types of Error You Are Most Likely to Commit.

A. LMICK claims experience in FY 2009, FY 2010 and FY 2011

Errors Alleged in Malpractice Claims Presented to LMICK during 2009, 2010 and 2011:

2009 2010 2011 Alleged error % Total % Total % Total Failure to know or properly apply the law 20.71% 20.56% 20.16% Failure to obtain the client's consent 4.17% 4.00% 3.80% Error in public record search 8.71% 8.75% 8.74% Failure to know or ascertain deadline correctly 6.18% 6.06% 6.12% Procrastination in performance of services/ lack of follow-up 5.63% 5.51% 5.73% Failure to calendar properly 8.20% 8.06% 8.15% Inadequate discovery of facts or inadequate investigation 7.46% 7.54% 7.73% Failure to react to calendar 3.51% 3.31% 3.18% Planning error in choice of procedures 8.01% 8.61% 9.26% Conflict of interest 3.15% 3.34% 3.24% Fraud 3.51% 3.79% 3.80% Failure to file a document, where no deadline involved 0.73% 0.79% 0.82% Failure to understand or anticipate tax 0.99% 0.96% 0.95% Clerical error 3.26% 3.17% 3.11% Failure to follow client's instructions 5.74% 5.79% 5.70% Improper withdrawal from representation 2.63% 2.62% 2.55% Libel or slander 1.24% 1.17% 1.18% Lost file, document or evidence 0.59% 0.59% 0.62% Malicious prosecution or abuse of process 4.98% 4.82% 4.65%

B. Other studies, showing types of alleged error by category and sub-category:

1. Administrative errors:

LMICK LMICK LMICK ABA

Error 2009 2010 2011 2007 Procrastination 5.63% 5.51% 5.73% 4.24% Failure to calendar properly 8.20% 8.06% 8.15% 7.44% Failure to react to calendar 3.51% 3.31% 3.18% 3.57% Failure to file document – no deadline 0.73% 0.79% 0.82% 0.73% Clerical error 3.26% 3.17% 3.11% 2.04% Lost file – document evidence 0.59% 0.59% 0.62% 0.60% Total 21.92% 21.43% 21.61% 28.63%

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2. Substantive errors:

LMICK LMICK LMICK ABA Error 2009 2010 2011 2007 Failure to know law 20.71% 20.56% 20.16% 11.51% Planning error – procedure choice 8.01% 8.61% 9.26% 9.44% Inadequate discovery/investigation 7.46% 7.54% 7.73% 8.10% Failure to know or ascertain deadline 6.18% 6.06% 6.12% 6.38% Conflict of interest 3.15% 3.34% 3.24% 4.79% Failure to understand or anticipate tax 0.99% 0.96% 0.95% 1.73% Public record error search 8.71% 8.75% 8.74% 4.02% Total 55.21% 55.82% 56.20% 45.97%

3. Client relations:

LMICK LMICK LMICK ABA Error 2009 2010 2011 2007 Failure to obtain client consent 4.17% 4.00% 3.80% 5.31% Failure to follow client instruction 5.74% 5.79% 5.70% 3.22% Improper withdrawal of representation 2.63% 2.62% 2.55% 2.70% Total 12.54% 12.41% 12.05% 11.22%

4. Intentional wrongs:

LMICK LMICK LMICK ABA Act 2009 2010 2011 2007 Malicious prosecution 4.98% 4.82% 4.65% 3.88% Fraud 3.51% 3.79% 3.80% 5.82% Libel or slander 1.24% 1.17% 1.18% 1.96% Total 9.73% 9.78% 9.63% 11.66%

C. Experience at LMICK and the ABA 2007 Study Both Indicate that Missing Deadlines Is One of the Most Serious Dangers:

LMICK LMICK LMICK ABA

Deadline Error 2009 2010 2011 2007 Failure to know deadline 6.18% 6.06% 6.12% 6.38% Failure to calendar 8.20% 8.06% 8.15% 7.44% Failure to react to calendar 3.51% 3.31% 3.18% 3.57% Total 17.89% 17.43% 17.45% 17.39%

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6. Be Mindful of the Kind of Grievance Your Client Is Most Likely to Make in a Bar Complaint.

Rule potentially Percentage Type of misconduct alleged violated of total Lack of diligence 1.3 31% Lack of competence 1.1 26% Conflict of interest 1.7 – 1.9 11% Fraud or misrepresentation 8.3 (c) 7% Inadequate communication 1.4 6% Excessive or improper attorney's fee 1.5 4% Misappropriation of client funds 1.15 3% Failure to follow client directives 1.2 2% Criminal conduct 8.3 (b) 2% Respect for rights of third person 4.4 2% Duties on termination of employment 1.16 2% Fairness to opposing party & counsel 3.4 2% Candor toward the tribunal 3.3 1% Unauthorized practice of law 5.5 1% Confidentiality 1.6 1%

5. Be Knowledgeable in Matters of Legal Ethics, Law Office Management and Protection Against Risk.

Recommended reading:

Kentucky Rules of Professional Conduct (Supreme Court Rule 3.130), contained in Kentucky Rules of Court (West Pub. 2011 Edition). Annotated Model Rules of Professional Conduct, American Bar Association, (Sixth Edition, 2007). Stephen S. Blumberg and Willis S. Baughman, Preventing Legal Malpractice-California Case Studies. Profile of Legal Malpractice Claims, ABA Standing Committee on Lawyers Professional Liability (2007). Long & Levit, The Law Office Guide to Purchasing Legal Malpractice Insurance (West Pub. 2007). Mallen & Smith, Legal Malpractice (West Pub. 2011 Edition). Todd B. Eberle, Richard H. Underwood, Timothy S. Chase, Kurt X. Metzmeier, Tracy J. Taylor, Kentucky Legal Ethics Opinions and Professional Responsibility Deskbook, (University of Kentucky College of Law Office of Continuing Legal Education, 4th Edition 2008).

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4. Be Proactive in Preventing Malpractice from Occurring.

Lawyers Mutual Insurance Company of California has done outstanding work in developing checklists for risk management programs. The following is their list of major categories in which malpractice may arise:

Legal Malpractice Avoidance Checklist A. Calendar every case, not just those in litigation. B. Confirm in writing your decision to accept a case or your decision

to withdraw or decline representation.

C. Do not sue clients for fees.

D. Take only those matters in which you have experience or associate with someone who does have experience or knowledge about a specific case.

E. Maintain good client relations.

F. Do not have a personal or a financial involvement with your

clients.

G. Research potential conflicts of interest before you take the case.

H. Investigate your case carefully before bringing a lawsuit or filing a claim.

I. Document everything leaving a paper trail understandable by third

parties.

J. Know when to reject potential clients or cases.

K. Know what to do upon receipt of a malpractice claim.

L. Obtain client consent before proceeding in a vital area of the case.

3. Be Responsive When You Receive a Bar Complaint.

A. Do not fail to make a timely response to any Bar complaint or investigation.

B. Do not make matters worse by attempting to cover up your

mistake.

2. Be Healthy and Sober.

Studies throughout the nation have repeatedly demonstrated that alcohol, drugs and mental illness (including depression) are substantial con-

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tributing factors in many, and perhaps most, cases of professional misconduct that result in suspension or disbarment.

1. Be Honest.

No matter what else happens in your professional career, no matter what else you may do or fail to do, pledge to yourself that you will be honest in dealing with whatever comes along. See SCR 3.130 (8.3). It is, without question, the single most effective thing you can do to limit your exposure to a malpractice claim or a disciplinary suspension. Even in an age of top ten lists, some things never change.

III. PETE'S TOP TEN

1. Don't go in business with a client. 2. Keep your client on the same page with you and be able to prove it. 3. Don't think the standard of care moves with your profit margin. 4. Avoid people and causes you dislike. 5. Don't throw good money after bad in the courthouse. 6. Be careful. 7. File your case before the deadline. 8. Don't assume your clients are your friends. 9. Behave like a human being. 10. Take good care of your old dog.

IV. TOP TEN – Katje Kunke, President Wisconsin Lawyers Mutual Insurance Company

1. Stop lying to your calendar about who is in charge of your life. 2. "No" is a complete sentence. Corollary: Somebody married my ex-husband. 3. If you don't like your client, you better love your carrier. 4. Conflicts of interest piss everyone off. 5. Your client already knows how this is going to turn out. 6. Never give bad news to a hungry client. 7. You have to let clients make dumb choices.

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8. What your client heard matters more than what you said. Corollary: Nobody remembers what anyone said. 9. They may call it "Practice," but they're kidding. 10. When they smile and nod, your client is not understanding or agreeing

with you.

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