Sagging economies tend to have insurance implications. Whenbusinesses slow or close and workers fear they will lose theirjobs, there is typically a spike in workers' comp claims.

I'm not saying the claims are false, but I know that many peoplewill work with aching backs caused by work-related injuries when itmeans a regular paycheck. But when the prospect of a paycheckbegins to dim, those same people may be more willing to file forworkers' comp indemnity payments.

We're seeing a new twist with the current economic woes, though,one that will undoubtedly also have insurance ramifications. Groupsof law school graduates and students are filing class-actionlawsuits against their law schools, claiming the schools inflatedthe employment statistics and expected salaries of graduates.

The law schools, of course, say the claims are baseless, butseveral suits are out there, alleging misleading enticements andeven fraud. Some may see these as personifying the basis of all thejokes about their being too many lawyers—in this case, lawyerssuing the very institutions that enabled them to becomelawyers.

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The allegations reportedly center on alleged false promises ofnot only employment but good salaries being used to lure lawstudents to take massive loans in order to gain a degree. The badeconomy, however, appears to be wreaking havoc with those supposedpromises. These students and graduates are stuck with mounds ofdebt and low-paying job—or none at all.

The suits against Manhattan's New York Law School and Thomas M. Cooley in Michigan seem to begetting the most press. But there are others and likely will bemore if the current suits gain traction.

The insurance implication? The personal and advertising injurycoverage grants on the policy probably will not respond due to thevery definition of “personal and advertising injury.” Thedefinition does not seem to fit these suits. There also areexclusions for the failure of goods, products, or services toconform with statements of quality or performance made inadvertising and for criminal activities (fraud).

This leaves the law schools' directors and officers (D&O)policies or educators' legal liability (ELL) policies. Althoughthese types of policies differ from insurer to insurer, theytypically exclude fraud, at least after it has been adjudicated asfraud. But they probably will be called upon to fund defensesuntil and if the actions are adjudicated as fraud. If settlementsor judgments are awarded, those same policies may be on the hook topay out even more, unless fraud or some other exclusionapplies.

I've seen a number of claims alleging failure to educate, andit's probable that suits alleging false advertising or evenfraudulent advertising probably have occurred. But it seems to methat the publicity that these cases are getting will lead to moresuch suits being filed.

If that happens, do you think D&O and ELL rates will rise?Or will underwriting standards tighten up? Will new exclusions beadded to these forms? No one knows for sure, but I think there maywell be changes if, again, these suits gain traction andmultiply.

How do you think the insurers will respond?