In the first part of this article, we considered someof the promises independent agents and brokers make, eitherimplicitly by claiming "independence" or explicitly in onlinecredos.

Plaintiffs' counsel in agent and broker E&O cases askpointed questions about claims of independence. Was a policy placedwith the insurer in question because it offered a higher commissionif the agent or broker generated a certain volume of business? Whatefforts did the agent or broker make to tailor standard policyforms to meet the insured's specific needs? When they ask questionslike these, they're doing their due diligence. We need your help todo ours.

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Don't play with fireworks

Agents and brokers can avoid E&O claims by following thestandards they've held out to the public, plus those imposed byapplicable insurance laws and regulations, and by documenting intheir files the steps they took to meet those standards.

Even an agent or broker who does everything perfectly andcorrectly all the time may get sued. When a large loss is uninsuredor underinsured, customers often look everywhere except in a mirrorto find someone to blame. E&O claims are a business risk of allprofessionals: Clients or patients with unsatisfactory outcomeslook to impose their misfortunes on those who tried to helpthem.

What should an agent or broker do when that claim or suitarrives?

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Step 1. Notify your insurer

The first step, of course, is to notify your liability insurer,or the designated person in your organization to deal with claims.You are not alone. You have people in your corner who have dealtwith more E&O claims in their careers than any attorney everwill.

Step 2. Don't speak with anyone

You should communicate only with your liability carrier and itsrepresentatives, those in your firm whose managerial or riskcontrol positions give them a need to know, and the counsel whowill be representing you. Your communications with others outsidethis risk management circle, with very few and limited exceptions,are not privileged — you and they can be forced to testify aboutwhat was said.

Step 3. Work with the defense team

Your job is to work with your insurance and legal team toprepare for the case. It will take time, perhaps a lot of time, togather all the documents, communications and electronic informationthat you'll be asked to provide, to help construct an accuratechronology of events.

Early in every case, I like to meet with clients where theywork, preferably in a conference room. That way they can focus onour discussion without distractions, and be out of others' earshot,but they still have easy access to their electronic and paperrecords. It's time well spent and can put the case on a path towardan early exit.

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Settlements aren't bad

Even when the facts strongly point to the conclusion that theagent or broker committed no error, it's important to remain opento settlement or other alternative dispute resolutionopportunities.

I enjoy telling a client that he or she has been vindicated, butthe road to vindication is costly and the outcome uncertain. "All'swell that ends well," as they say, but often "All's well that endssoon."

Independent agents and brokers are members of an honorableprofession, aiding people and businesses in mitigating their risksand losses before they occur. By meeting the standards of theircraft, exercising their independent judgment, and keeping accurate,contemporaneous records of what they've recommended and why they'llhave less need to meet someone like me on a professional basis.

Louie Castoria ([email protected])is a partner in the national law firm of Kaufman Dolowich &Voluck LLP, and co-chairs the firm's Professional LiabilityPractice Group and its San Francisco office.