In fact, “a significant amount of the claims activity” against IP lawyers involves the foreign rights of a client, Mr. Greene revealed.

Another unique wrinkle is that IP lawyers–who form a “tightly knit community” –often have “intricate networks” by which they refer “business back and forth between foreign law firms,” he indicated.

It is also crucial for the IP practitioner–and, by extension, the practitioner's insurer–to be on top of legal developments not only in the United States but also internationally, Mr. Greene added.

For all these reasons, carriers that have not “invested in writing globally” and in the proper networks and infrastructure to handle claims, retain outside counsel and provide risk management services “find it difficult and much more expensive to look at these exposures,” Mr. Greene observed.

As he explained, IP encompasses copyrights, patents, trademarks and trade secrets.

To help IP practitioners obtain proper coverage, Jamison established its Pro Intellectual Property Lawyers Professional Liability Insurance Program in 1967.

The program is designed for attorneys who devote at least 80 percent of their practice to IP law, Mr. Greene said. It also covers all individuals in the firm who provide services, including patent agents, who are unlicensed professionals who practice before the U.S. Patent Office.

Mr. Greene explained that his company put together the program after finding that carriers that were writing legal professional liability insurance at the time were skittish about using their standard underwriting templates for law firms specializing in IP law. Jamison also found that “there was significant concentration of firms around the country where 80 percent to 95 percent of their practice” was IP, noted Mr. Greene.

But he said that, even today, there is an aversion by many carriers to writing coverage for IP lawyers. He cited two main reasons for this.

First, claims against IP attorneys tend to be low frequency and high severity. As an example, Mr. Greene indicated that if an attorney makes a mistake in the process of obtaining a pharmaceutical biotechnology patent for a client, “the maximum probable loss that the client sustains is quite high.”

Second, the cost of investigating and defending the claims against IP attorneys is “much higher than it is in other areas of legal malpractice,” Mr. Greene stated.

He explained that “there are many unique issues associated with the intersection of technology and the law” that tend to complicate IP cases. This complexity increases the cost of experts necessary to a case and of discovery, he observed.

The aversion to underwriting IP practitioners translates into “a very limited number of markets we can even get to participate up in those higher excesses,” Mr. Greene indicated.

These days, Lloyd's of London provides the primary basis of coverage for the Pro program, Mr. Greene revealed.

He indicated that those insured under the Pro program range from sole practitioners to firms with hundreds of lawyers. He said that this diversity in size is due mainly to the widely divergent practices of IP attorneys.

For example, sole practitioners may specialize in “IP prosecution and registration” or in “infringement counseling–writing opinions on whethera particular practice of a company infringes on someone else's IP,” Mr. Green said.

In contrast, the larger law firms may “litigate billion-dollar cases,” he added.

The particular client base also may dictate the size of an office's practice. Thus, it is possible for a sole practitioner or a small three-person firm to service a Fortune 1000 client, Mr. Greene indicated.

There is plenty of work for IP practitioners, he revealed. “The amount of work that U.S. business interests are looking for lawyers to perform in this area is increasing dramatically because of the nature of our economy, which is becoming moreservice-orientedand ideas- and information-based,” he said.

As a result, more and more insurers are finding that their general-practitioner policyholders are increasingly providing IP services, with an increasing number of firms starting their own in-house IP practice groups, Mr. Greene noted.

He warned that IP “is a very specialized area, and if you dabble in it, it's like dabbling in securities law.” He reported having seen “dabblers” that encountered “very high risk claims” pull out of LPL coverage for IP practitioners.

Jamison, which has about 600 insureds in the Pro program, provides various risk management services that focus on the “practice profile” of a particular IP practitioner-client, Mr. Greene stated. These services may include helping to set up systems for engagement letters, docket letters or tracking conflicts, he said.

Additionally, by tapping into its database of more than 2,000 claims made against IP practitioners over the years, Jamison “by reverse engineering” can help its clients see what types of systems within a law firm might have mitigated those claims, Mr. Greene revealed.

Finally, he stated that one area increasingly emphasized by carriers is continuing education for the IP practitioner, with a particular focus on ethical issues. Despite the complexity of the field, Mr. Greene stated that many IP attorneys fail to keep up with continuing education.

One incentive to do so is by providing credit on the insurance rates for practitioners who participate in IP continuing education programs, Mr. Greene said.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, November 12, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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