An Overview of the PLF:

Understanding Your
Coverage
Presented by
Ira Zarov
Chief Executive Officer

Oregon State Bar Professional Liability Fund

 Introductory Statement

These materials are not meant to be a substitute

for the Professional Liability Fund Coverage Plan.
Any interpretation of the Coverage Plan should be
made only after reference to the full Plan and the
accompanying comments.
The full Plan is available on the PLF Website –
www.osbplf.org
Coverage questions can be addressed to the PLF
staff at 503-639-6911
THE PLF IS UNIQUE – THERE ARE NO OTHER STATES
IN WHICH MALPRACTICE COVERAGE IS MANDATORY

THE PLF HAS A BOARD OF 9 MEMBERS – 7 ARE ATTORNEYS AND TWO

ARE PUBLIC MEMBERS. THEY ARE APPOINTED BY THE BOARD OF
GOVERNORS OF THE OSB.

THE PURPOSE OF THE PLAN IS TO PROVIDE A MINIMUM AMOUNT OF

MONEY FOR EACH LAWYER’S MISTAKES. THE PLAN COVERS
INDIVIDUALS – NOT FIRMS – SHARED RISK

IT IS NOT DESIGNED TO COVER A CATASTROPHIC COVERED ACTIVITY

RESULTING IN MANY CLAIMS AGAINST ONE LAWYER OR A NUMBER OF
LAWYERS.
 The PLF Mission
THE PLF MISSION IS TO PROVIDE PRIMARY
PROFESSIONAL LIABILITY COVERAGE CONSISTENT WITH
A SOUND FINANCIAL CONDITION, SUPERIOR CLAIMS
HANDLING, EFFICIENT ADMINISTRATION, AND EFFECTIVE
PERSONAL AND PRACTICE MANAGEMENT ASSISTANCE.

THE DUTY OF THE PLF IS TO COVERED PARTIES

THE PUBLIC IS BENEFITED BECAUSE OF THE CERTAINTY

ATTORNEYS WILL HAVE MALPRACTICE COVERAGE.
 The PLF has four departments:

1. ACCOUNTING

2. ADMINISTRATION – EXCESS INSURANCE

3. PRACITCE MANAGEMENT AND ATTORNEY

ASSISTANCE PROGRAM

4. CLAIMS
 Confidentiality
ü All Claims Information is
Confidential.

ü All Communications with the

OAAP and Practice
Management Advisors is
Confidential. The
Confidentiality is Protected by
Statute, OSB Policy and PLF
Policies.

ü Matters Remain Confidential

from the Oregon State Bar,
including Discipline, the Board THE CONFIDENTIALITY OF PLF MATTERS IS A
of Governors and any Other
v

CORE VALUE OF THE PLF.

OSB Entity.
 Mandatory Coverage

COVERAGE IS MANDATORY FOR ANY

ATTORNEY WHO IS A MEMBER OF THE
OREGON STATE BAR, IS IN THE
PRIVATE PRACTICE OF LAW, AND
WHOSE PRINCIPAL OFFICE IS IN
OREGON – MORE THAN 50% OF THEIR
TIME IS SPENT IN OREGON
 CLAIMS
11 CLAIMS ATTORNEYS – HANDLE APPROXIMATELY 925 CASES A
YEAR AND FIELD OVER 1100 “INFORMATIONAL CALLS” A YEAR.

ON AVERAGE 4 NEW CLAIMS EACH WORK DAY

THE 925 CLAIMS TRANSLATES TO A “FREQUENCY RATE” IN THE

13% RANGE – THAT MEANS STATISTICALLY --

13 OF 100 COVERED PARTIES WILL HAVE A CLAIM IN A GIVEN

YEAR.
 CLAIMS

The PLF PAYS INDEMNITY ON 35% OF CLAIMS.

19% WITH EXPENSE, 16% WITHOUT EXPENSE.
PAY CLAIMS EXPENSE ON 40%
PAY NO CLAIMS EXPENSE OR INDEMNITY ON
25%
AVERAGE COST PER CLAIM DIFFERS FROM
YEAR TO YEAR – IT IS PRESENTLY ESTIMATED
TO BE $19,500.
 HOW MUCH COVERAGE DO YOU
HAVE?

q $300,000 FOR INDEMNITY plus a $50,000 CLAIMS

EXPENSE.
q IT IS A BURNING POLICY –
BURNING means that once the claims expense is EXHAUSTED
further defense expenses are taken from the remaining $300,000.
 WHAT IS A CLAIM?
“CLAIM” means a demand for DAMAGES or written notice to a
COVERED PARTY of an intent to hold a COVERED PARTY liable as a
result of a COVERED ACTIVITY, if such notice might reasonably be
expected to result in an assertion of a right to DAMAGES.
 WHAT ARE DAMAGES?
“DAMAGES” means money to be paid as
compensation for harm or loss. It does not refer to
fines, penalties, punitive or exemplary damages, or
equitable relief such as restitution, disgorgement,
rescission, injunctions, accountings, or damages and
relief otherwise excluded by this Plan.
 WHO IS A COVERED PARTY

The following are COVERED PARTIES:

a. YOU.
b. In the event of YOUR death, adjudicated
incapacity, or bankruptcy, YOUR conservator,
guardian, trustee in bankruptcy, or legal or personal
representative, but only when acting in such capacity.
Any attorney or LAW ENTITY legally liable for YOUR
COVERED ACTIVITIES, but only to the extent such
legal liability arises from YOUR COVERED
ACTIVITIES.
 WHAT IS A COVERED ACTIVITY

Two Types – Your Conduct and Conduct of Others.

[YOUR CONDUCT]
1. Any act, error, or omission committed by YOU that satisfies all of the following
criteria:
a. YOU committed the act, error, or omission in rendering professional
services in YOUR capacity as an attorney in private practice, or in failing to render
professional services that should have been rendered in YOUR capacity as an
attorney in private practice.
b. At the time YOU rendered or failed to render these professional services:
(1) YOUR principal office was located in the State of Oregon;
(2) YOU were licensed to practice law in the State of Oregon; and
Such activity occurred after any Retroactive Date shown in the Declarations.
 WHAT IS A COVERED ACTIVITY

Two Types – Your Conduct and Conduct of Others.

[CONDUCT OF OTHERS]

2. Any act, error, or omission committed by a person for whose conduct YOU are legally liable in
YOUR capacity as an attorney, provided at the time of the act, error, or omission each of the
following criteria was satisfied:
a. The act, error, or omission causing YOUR liability:
(1) Arose while YOU were licensed to practice law in the State of Oregon;
(2) Arose while YOUR principal office was located in the State of Oregon; and
(3) Occurred after any Retroactive Date shown in the Declarations. (WHEN YOUR
COVERAGE BEGINS)
b. The act, error, or omission, if committed by YOU, would constitute the rendering of
professional services in YOUR capacity as an attorney in private practice.
The provision also requires the attorney from whose actions the liability arose was at the time
the action occurred a PLF COVERED PARTY.
 WHAT IS A COVERED ACTIVITY

AND,

[YOUR CONDUCT IN A SPECIAL CAPACITY]

Any act, error, or omission committed by YOU in YOUR capacity as a

personal representative, administrator, conservator, executor, guardian,
guardian ad litem, special representative pursuant to ORS 128.179, or trustee
(except BUSINESS TRUSTEE); provided that the act, error, or omission arose
out of a COVERED ACTIVITY as defined in Subsections 1 and 2 above, and a
CLAIM is brought by or for the benefit of the beneficiary of the special capacity
relationship and arises out of a breach of that relationship.
 WHERE ARE YOU COVERED?

THE UNITED STATES, ITS TERRITORIES,

CANADA AND NATIVE AMERICAN COURTS.
“SAME OR RELATED’’ PLAN PROVISIONS

THE PLAN ALSO INCLUDES A ‘SAME OR RELATED” PROVISION

OF THE PLAN. WHILE THIS CIRCUMSTANCE DOES NOT OCCUR
FREQUENTLY WHEN IT DOES IT HAS POTENTIAL RAMIFICATIONS
FOR COVERED PARTIES BECAUSE CLAIMS THAT ARE SAME AND
RELATED SHARE AN INDEMNITY LIMIT

“SAME OR RELATED CLAIMS” means two or more CLAIMS that are

based on or arise out of facts, practices, circumstances, situations,
transactions, occurrences, COVERED ACTIVITIES, damages, liability,
or the relationships of the people or entities involved (including clients,
claimants, attorneys, and/or other advisors) that are logically or
causally connected or linked or share a common bond or nexus.
CLAIMS are related in the following situations:
 CLAIMS ARE RELATED WHEN:
AN EXAMPLE
Example No. 7:
Attorney C represents a group of clients at trial and commits certain
errors.
Attorney D of the same firm undertakes the appeal, but fails to file the
notice of appeal on time.
Attorney E is hired by clients to sue Attorneys C and D for malpractice,
but misses the statute of limitations.
Clients sue all three attorneys.
The CLAIMS are related and only a single Limit of Coverage applies to
all CLAIMS. See Subsection 14.e above. When, as in this example,
successive or collective errors each cause single or multiple clients and/or
claimants harm or cumulatively enhance their damages or losses, then the
CLAIMS are related. In such a situation, a claimant or group of claimants
cannot increase the limits potentially available by alleging separate errors
by separate attorneys.
Attorney E, however, may be entitled to a CLAIMS EXPENSE
ALLOWANCE separate from the one shared by C and D.
 DOES AN EXCLUSION APPLY

THE PLF HAS 21 EXCLUSIONS.

THE GENERAL CATEGORIES ARE:

INTENTIONAL OR FRAUDULENT ACTS,
BUSINESS RELATIONSHIPS,
CLAIMS FOR FEES,
FAMILY RELATIONSHIPS,
NON-LEGAL TORTIOUS ACTS, AND
VOLUNTARILY ACCEPTING LIABILITY ON A MATTER.
 EXCLUSION 1:

This Plan does not apply to a COVERED

PARTY for any CLAIM in which that
COVERED PARTY participates in a
fraudulent or collusive CLAIM.
However, partners of the wrongdoer
would be covered under the protections for
vicarious liability.
 EXCLUSION 2:

This Plan does not apply to any CLAIM

based on or arising out of any
intentional, dishonest, fraudulent,
criminal, malicious, knowingly wrongful,
or knowingly unethical acts, errors, or
omissions committed by YOU or at
YOUR direction or in which YOU
acquiesce or remain passive after having
personal knowledge thereof.
 EXCLUSION 3:

3. This Plan does not apply to any CLAIM

based on or arising out of a proceeding
brought against YOU by the Oregon State
Bar or any similar entity.
 EXCLUSION 4:
4. This Plan does not apply to:
a. The part of any CLAIM seeking punitive,
exemplary or statutorily enhanced damages; or
b. Any CLAIM for or arising out of the imposition of
attorney fees, costs, fines, penalties, or other sanctions on
the COVERED PARTY or others imposed under any
federal or state statute, administrative rule, court rule, or
case law intended to penalize bad faith conduct and/or the
assertion of frivolous or bad faith claims or defenses. The
PLF will defend the COVERED PARTY against such a
CLAIM, but any liability for indemnity arising from such
CLAIM will be excluded.
 EXCLUSION 5:

This Plan does not apply to that part of

any CLAIM based on or arising out of YOUR
conduct as an officer, director, partner,
BUSINESS TRUSTEE, employee,
shareholder, member, or manager of any
entity except a LAW ENTITY.
 EXCLUSION 6:
This Plan does not apply to any CLAIM by or on behalf of any
business enterprise:
a. In which YOU have an ownership interest, or in which YOU
had an ownership interest at the time of the alleged acts, errors, or
omissions on which the CLAIM is based;
b. In which YOU are a general partner, managing member, or
employee, or in which YOU were a general partner, managing member,
or employee at the time of the alleged acts, errors, or omissions on
which the CLAIM is based; or
c. That is controlled, operated, or managed by YOU, either
individually or in a fiduciary capacity, including the ownership,
maintenance, or use of any property in connection therewith, or was so
controlled, operated, or managed by YOU at the time of the alleged
acts, errors, or omissions on which the CLAIM is based.
 EXCLUSION 7:

This Plan does not apply to any CLAIM made by:

a. YOUR present, former, or prospective
partner, employer, or employee; or
b. A present, former, or prospective officer,
director, or employee of a professional corporation
in which YOU were a shareholder,
unless such CLAIM arises out of YOUR conduct
in an attorney‑client capacity for one of the parties
listed in Subsections a or b.
 EXCLUSION 8:

This Plan does not apply to any CLAIM

based on or arising out of any business
transaction subject to ORPC 1.8(a) or its
equivalent in which YOU participate with a
client unless disclosure in the form of
Disclosure Form ORPC 1 (attached as
Exhibit A to this Plan) has been properly
executed prior to the occurrence giving rise
to the CLAIM and either:
A copy of the letter needs to be sent to the
PLF. The exclusion describes how that should
be done.
 EXCLUSION 9:
Investment advice.
This Plan does not apply to any CLAIM based on or
arising out of any act, error, or omission committed by YOU
(or by someone for whose conduct YOU are legally liable)
while in the course of rendering INVESTMENT ADVICE if
the INVESTMENT ADVICE is in fact either the sole cause
or a contributing cause of any resulting damage. However,
if all INVESTMENT ADVICE rendered by YOU constitutes a
COVERED ACTIVITY described in Section III.3, this
exclusion will not apply unless part or all of such
INVESTMENT ADVICE is described in Subsections d, e, f,
or g of the definition of INVESTMENT ADVICE in Section
I.10.
 EXCLUSIONS:

Attorney fees.
The PLAN is not designed to cover the
business aspects of a law practice. For
that reason return of fees, collecting fees, or
collecting anything that inures directly to
the benefit of the covered party are not
covered.
 EXCLUSION 10:

This Plan does not apply to any CLAIM:

For the return of any fees, costs, or
disbursements paid to a COVERED PARTY (or
paid to any other attorney or LAW ENTITY with
which the COVERED PARTY was associated at
the time the fees, costs, or disbursements were
incurred or paid), including but not limited to
fees, costs, and disbursements alleged to be
excessive, not earned, or negligently incurred;
Parts b. and c. of the exclusion makes clear that
any fee related matter is not covered.
 EXCLUSION 11:

Family relationship
This Plan does not apply to any CLAIM
based upon or arising out of YOUR legal
services performed on behalf of YOUR spouse,
parent, step-parent, child, step-child, sibling, or
any member of YOUR household, or on behalf
of a business entity in which any of them,
individually or collectively, have a controlling
interest.
 EXCLUSION 12:

This Plan does not apply to any CLAIM

arising out of a COVERED PARTY’S
activity as a fiduciary under any
employee retirement, deferred benefit, or
other similar plan.
 EXCLUSION 13:

This Plan does not apply to any CLAIM

arising out of any witnessing of a signature
or any acknowledgment, verification upon
oath or affirmation, or other notarial act
without the physical appearance before
such witness or notary public, unless such
CLAIM arises from the acts of YOUR
employee and YOU have no actual
knowledge of such act.
 EXCLUSION 14:
[GOVERNMENT ACTIVITY EXCLUSION]
This Plan does not apply to any CLAIM arising out of YOUR
conduct:
a. As a public official or an employee of a governmental
body, subdivision, or agency; or
b. In any other capacity that comes within the defense
and indemnity requirements of ORS 30.285 and 30.287, or
other similar state or federal statute, rule, or case law. If a
public body rejects the defense and indemnity of such a
CLAIM, the PLF will provide coverage for such COVERED
ACTIVITY and will be subrogated to all YOUR rights against
the public body.
 EXCLUSION 15:
[HOUSE COUNSEL EXCLUSION]
This Plan does not apply to any CLAIM arising out of
YOUR conduct as an employee in an employer‑employee
relationship other than YOUR conduct as an employee for
a LAW ENTITY.
 EXCLUSION 16:
[GENERAL TORTIOUS CONDUCT EXCLUSIONS]
This Plan does not apply to any CLAIM against any
COVERED PARTY for:
a. Bodily injury, sickness, disease, or death of any
person;
b. Injury to, loss of, or destruction of any real, personal, or
intangible property or loss of use thereof; or
c. Mental anguish or emotional distress in connection
with any CLAIM described under Subsections a or b.
This exclusion does not apply to any CLAIM made under
ORS 419B.010 if the CLAIM arose from an otherwise
COVERED ACTIVITY.
 EXCLUSION 17:

This Plan does not apply to any CLAIM

based on or arising out of harassment or
discrimination on the basis of race, creed,
age, religion, sex, sexual preference,
disability, pregnancy, national origin, marital
status, or any other basis prohibited by law.
 EXCLUSION 18:
[PATENT EXCLUSION]
This Plan does not apply to any CLAIM based upon or
arising out of professional services rendered or any act,
error, or omission committed in relation to the prosecution
of a patent if YOU were not registered with the U.S. Patent
and Trademark Office at the time the CLAIM arose.
 EXCLUSION 19:

[SUA EXCLUSION]
This Plan does not apply to any CLAIM
for damages consisting of a special
underwriting assessment imposed by the
PLF.
 EXCLUSION 20:

This Plan does not apply to any CLAIM:

a. Based upon or arising out of any bond or any surety,
guaranty, warranty, joint control, or similar agreement, or any
assumed obligation to indemnify another, whether signed or otherwise
agreed to by YOU or someone for whose conduct YOU are legally
liable, unless the CLAIM arises out of a COVERED ACTIVITY
described in SECTION III.3 and the person against whom the CLAIM
is made signs the bond or agreement solely in that capacity;
b. Any costs connected to ORS 20.160 or similar statute or
rule;
c. For liability based on an agreement or representation, if
the Covered Party would not have been liable in the absence of the
agreement or representation; or
Claims in contract based upon an alleged promise to obtain a
certain outcome or result.
 EXCLUSION 21:
[BANKRUPTCY TRUSTEE EXCLUSION]
This Plan does not apply to any CLAIM arising out of
YOUR activity (or the activity of someone for whose
conduct you are legally liable) as a bankruptcy trustee.
 Excess Program
v INDEPENDENT FROM PRIMARY
PROGRAM AND TOTALLY SELF-
SUPPORTING
v TOTALLY REINSURED
v You can purchase anywhere from
$700,000 to $9,700,000.
v The PLF recommends that you have
excess coverage.
SECTION XIV — AUTOMATIC EXTENDED
CLAIMS REPORTING PERIOD
v If you stop practicing during a year or at the end
of a year the PLF plan has Extended Reporting
Coverage (ERC) for all claims that arise in the
future from your practice while you were a
covered party. The coverage is $300,000 plus a
$50,000 claims expense.
v If at the time you stop practicing a portion of
your coverage has been used for a claim, the
amount of your limit remaining will be the
amount of ERC available.
 SPECIAL UNDERWRITING ASSESSMENT
IN THE EVENT YOU HAVE A CLAIM FOR WHICH
OVER $75,000 IS SPENT THERE WILL BE A
SPECIAL UNDERWRITING ASSESSMENT – OR
SUA.

THE SUA IS 1% OF THE AMOUNT OVER $75,000 PAID

FOR EACH OF THE NEXT FIVE YEARS.

IF YOU ARE NO LONGER A PLF COVERED PARTY THE

SUA IS NOT COLLECTED.
 What happens if you report a claim?

q The PLF will open up a file in your name.

q We will ask for your file. The claimant is entitled
to your file, subject to removal of
communications that might not pertain to the
case – notes to the PLF for example -- or might
belong to you for some other reason. The PLF
claims attorney will discuss what must be
produced.
q An assigned claims attorney handles matter or if
litigation or in need of special evaluation then
outside counsel is also appointed.
q Defense panel 55 firms around the state.
 DUTY TO DEFEND

THERE IS A TRIPARTIE RELATIONSHIP

BETWEEN DEFENSE PANEL ATTORNEY, THE
PLF AND THE COVERED PARTY –

THE DEFENSE ATTORNEY REPRESENTS

BOTH THE PLF AND THE COVERED PARTY,
BUT IN THE EVENT OF A CONFLICT HIS OR
HER FIRST DUTY IS TO DEFEND THE
INTEREST OF THE COVERED PARTY.
Ø Under the PLF Coverage Plan the PLF has the
right to handle the claim and does not need the
approval of the Covered Party to settle the
matter.
Ø The PLF endeavors to work closely with the
Covered Party in all ways and provides all
correspondence to the Covered Party.