Of all the “business professionals” (i.e. attorney’s, accountant’s, banker’s, realtor’s, environmental engineers) we are highlighting in the ERMI TEAMing with “Business Professionals” series, attorneys represent the lowest hanging fruit for insurance professionals to TEAM with.
There are several reasons for this which we will cover in this competitive environmental intelligence but mainly, attorneys tend to specialize in specific areas of law, i.e. general business, estate planning, bankruptcy, patent / trademark, environmental, criminal, international, employee, civil… This means an attorney is well versed in their specific area of law but possess very little knowledge about assisting their clients to manage and transfer their environmental exposures. Note: As highlighted in Series #1, TEAMing With “Business Professionals”, every business and individual is impacted by environmental exposures.
Historically, once an environmentally reactive business / individual calls their attorney to assist them with an environmental liability, the attorney brings in their firm’s environmental specialist to address the issue. This business model will generally lead to some form of litigation and what attorney’s clients have learned over the years about environmental litigation is its very time consuming, stresses resources and desired results are generally not achieved
Insurance professionals are not going to fix a broken business model overnight, but you can fill a huge gap in most attorney’s work, lack of financial assurance to backstop their legal documents. In today’s business environment, the name of the game for attorney’s is avoid litigation to grow their client base and business. Insurance professionals are armed with an arsenal of products to assist attorneys to grow their business model.
The bottom line, today’s transparent business environment has changed the way Attorney’s must address environmental exposures impacting their client’s which means opportunity for insurance professionals.
Note: Education is a vital component to building a TEAM relationship with “Business Professionals”. Throughout the ERMI “Business Professionals” series we will offer coaching tips to assist you in building your relationships with “Business Professionals”.
ERMI TEAM Relationship Coaching Tip: In some contracts, attorney’s will require financial assurance to backstop indemnifications contained in the contract. They will generally achieve this utilizing standard property and casualty and environmental insurances with coverage being evidenced by a certificate of insurance. The problem this strategy presents in relation to environmental insurance is, an environmental insurance policy will not be issued without the insurance carrier first receiving a completed and signed “warranty” insurance application. In general terms the application will state that the environmental insurance policy is being issued based upon the signed “warranty” application and that the application will become part of the policy. The application goes on to say at the time of a loss if it’s discovered the application is not accurate, the insurance carrier can deny coverage. Without first confirming the “warranty” application is accurately filled out the certificate of insurance may not be worth the paper it is written on and the same is true for the attorney’s financial assurances contained in the contract. Coaching attorneys to understand warranty applications will fill a gap in their financial assurance strategy in contracts and a gigantic hole in their E&O exposure.
To support the above statements let’s look at another example. For years, attorneys have utilized environmental indemnifications in real estate Buy / Sell Agreements, mergers and acquisitions and many other legal instruments. Generally speaking, attorneys feel content with addressing potential environmental exposures by simply utilizing environmental indemnifications in legal instruments and not backing them up with a financial assurance mechanism (i.e. bond, letter of credit, monies on deposit, insurance).
Today we know the problems created by this mindset and the fact that environmental indemnifications are a very cursory way of addressing environmental exposures in legal transactions.
ERMI TEAM Relationship Coaching Tip: Environmental insurance policies pay for defense costs. Do you think an attorney would rather collect their fees from a financially solvent insurance carrier or a client that just found out they have contaminated half their towns drinking water?
For decades, our Federal Government has utilized financial assurance requirements for asbestos and lead abatement contractors, regulated underground storage tanks, hazardous & industrial waste haulers, Landfills…, so why not more attorney’s?
Insurance professionals have a variety of financial assurance products to assist attorneys to reduce their E&O exposure, one of which is pollution liability insurance. TEAMing with ERMI will allow you access to the full menu of the environmental insurance products offered by the major environmental insurance carriers.
ERMI TEAM Coaching Tip: Talking points with attorney’s.
To understand why “Best Practices” for attorneys means moving beyond their current litigious business model to possessing a working knowledge of managing and transferring environmental exposures, we first must be on the same page about a few environmental facts.
- What is a “Pollutant”? If you look at an environmental indemnification in a contract, it generally describes a Pollutant as smoke, vapors, soot, fumes, acids….. However, due to the way courts and insurance companies have responded to lawsuits and insurance claims, environmental Strategist™ (eS) has developed a definition that is easier to understand. eS define a “Pollutant” as a material, substance or product that gets introduced to an environment for other than its intended use or purpose.” In other words, something that ends up where it does not belong can be a pollutant. eS have examples where fresh water, milk, cheese, fruit, beer and more have all been defined as a “Pollutant”.
- Law firms generally utilize specially trained environmental attorney’s to address their client’s environmental exposures when in reality their biggest environmental exposures are with their other legal specialist’s i.e. general business, health, international, labor, estate planning, merger & acquisition, real estate…. In short, nearly every attorney must possess a working knowledge of proactively addressing their client’s environmental exposures. TEAMing with ERMI insurance professionals can do this. In short, you become the law firms backroom environmental risk manager on managing and transferring their client’s environmental exposures.
- Historically, attorneys have made their money by addressing past environmental problems such as asbestos, lead, mold and so much more. This reactive approach has cost attorneys time, resources, client relationships and much more. TEAMing with ERMI we can coach attorney’s on proactively managing and transferring their client’s environmental exposures to increase productivity and profits while reducing their E&O exposure.
- The inability of at fault parties to meet environmental indemnifications in contracts is a reputational and liability risk for attorney’s. Attorneys not practicing environmental “Best Practices” may find their E&O insurance at risk of claims from disgruntled client’s.
ERMI TEAM Coaching Tip: You would be amazed how many contracts Environmental Risk Managers (ERMI) reviews that an attorney constructed requiring the wrong pollution insurance. On almost a weekly basis ERMI will assist an attorney with correcting their contract to make sure the proper pollution insurance is being requested and put into place. TEAMing with ERMI we can make sure your legal TEAM members are not opening themselves up to an E&O exposure by requesting the improper environmental insurance.
Today’s business environment is demanding attorneys know if their work is preserving an asset or creating an environmental liability for their client and themselves. Insurance professionals TEAMing with attorney’s to manage and transfer the attorney’s clients environmental exposures will position themselves as a trusted advisor and strategic partner while driving the sales of their insurance products.
In Environmental Risk Managers “Business Professionals” Series #3 we will strategize on TEAM building with Bankers / Financial Institutions.