||In 1993 the
Alabama Legislature enacted the Limited Liability Company Act (Ala.
Code 1975, § 10-12-1, et seq.) which allows a member of a
limited liability company to be liable for a "negligent or wrongful
act or omission" in which he personally participates as though he
were a sole practitioner (§ 10-12-45). If attorneys practice in an
LLC, will that reduce their malpractice premium rate?
||Probably not. LLC
acts are still largely unconstrued by appellate courts due to their
recent enactment in most states which have them. The practical effect of
the protection purportedly afforded under an LLC statute is yet to be
determined. In any event, it is clear that an individual attorney who is
alleged to have committed malpractice under an LLC must still be
defended and/or indemnified. Where more than one attorney in an LLC
participates in a case or transaction, it is likely that all
participants will be the object of suit. Whether, in theory, one
attorney is the focus of a suit or whether all attorneys in a firm are,
it is doubtful that the LLC act will decrease insurance exposure. AIM
will, however, watch this matter carefully. As a mutual insurer, AIM is
committed to fair and reasonable premium rates. If it becomes possible
to reduce the cost of malpractice insurance for attorneys practicing in
LLC's, AIM will do so.
premium go up if I report a claim?
Probably not. In most cases, the premium will not increase due to
reporting a single claim. Underwriting will evaluate the frequency and
severity of multiple claims reported to determine whether an increase in
premium is warranted or whether insurance can still be offered.