When I handle an E&O claim, the best results come when the client works hand-in-hand with me. That means educating me in the nuts and bolts, the minutia of what they do, why they do it and how they do it. Especially, as you know, with technology that is ever changing. 10 years ago, even less…you were not submitting your applications/submissions via portals. You were not required to check a carrier's website for “Notifications" as to whether or not a submission was accepted or rejected. In fact now, things are changing so fast in your business that I am told that if one question is rejected on an online application, you cannot go further as the algorithm rejects the risk.  I have always relied on you to educate me to better serve you in defending an E&O case.

Recent events in several significant exposure E&O cases have made me realize that the other side of the coin is also true. You need to know and understand how an E&O lawsuit works and what we need to defend you. The why is simple. But understanding, even a little, the litigation process, you may be able to put into place procedures or tweak existing ones that will prove exponentially helpful in successfully defending an E&O suit.

For today, I want to focus on one aspect of a case: “Discovery". A fancy term that simply refers to that part of the case, (after it is filed and before motions that seek to dispose of the case, or a trial), where the parties exchange documents and then take depositions. Cases live or die on documents not on what someone says in an affidavit or testifies at a deposition. People lie. Especially when large sums of money are on the line. There are no consequences for a Plaintiff lying about what it asked the broker to procure IF….there is no documentary proof otherwise.

Your files for an insured, the procurement, servicing, renewal etc. etc. are the official road map of what you did for that insured. It tells a story. Most importantly it tells a story to me or any E&O attorney hired to defend you. The ONLY way for me to understand that story is if your files and the documents in them are properly organized, properly saved and, most importantly, properly named and identified. I will say this bluntly. The messier a client's files are when I get them, the more likely that there is merit to the E&O claim as it is the canary-in-the-coal-mine that something was not done correctly.

Here is the problem in 2025. I have been doing this long enough to remember going to a client's office with an empty box. Then the client opened the drawer in the cabinet and in there were Redwelds with the name of the insured on it. In that insured's Redweld were separate file folders for the first policy complete with intake forms, applications etc. Then the renewal policy folder. Then correspondence. Maybe a separate folder for each claim. Notices of Cancellation, Reinstatement etc were in the folder for the policy to which they applied. The key was everything was saved (1) for the policy to which it applied and (2) in chronological order.

That makes sense the procurement happened in chronological order. One day ABC Inc was not a client. Then ABC called you or they walked in and asked if you could help them get insurance. Then came the intake information. Then the application was filled out, signed and submitted. Etc. etc. That is not only how it unfolded but the way I tell the Court the story of what transpired so the Judge understands how we got from A to B…the latter being the E&O claim and why we are in court.

But those days are gone. And that leads to major E&O Defense problems.

Now you run your agencies using any number of AMS systems. Used properly they are a great asset to the smooth and efficient running of your business. But they can present a nightmare when an E&O suit occurs. First, too many clients are not properly naming/identifying documents in the system. Second, not all documents are making it in the system so that, for example, all emails are saved. Third, documents are not being saved, organized in any chronological way or tied to a policy.

Recently, I was asked to defend a broker sued for failing to procure coverage. At the time of the lawsuit, the Plaintiff insured was on the second renewal. Thus, there were 3 years of policies, procurement to be reviewed. When I got my clients full file via Google One Drive, I was mortified to find nothing but 400 emails. Most with attachments. The emails were not named with any date or identifying information. The actual applications, policies, transmittal letters to the insured were nothing more than attachments to emails save that way in the AMS. While we eventually pieced together the chronology, I had little confidence that it was complete. There was not even the printout or screenshot of the online/portal application.

The night before my client's deposition, he sent me an email that had been in his personal email and not saved into the AMS system. I had to provide it that night to counsel. Suffice to say that the deposition was adjourned and we all agreed that we would re-search our AMS system for everything relevant to the lawsuit, the Plaintiff-Insured again.

Getting back to “Discovery", NY, as with most states, requires by statute that parties provide documents to their adversaries that are “material and necessary in the prosecution or defense of an action,….". NY CPLR §3101(a). In generally means in practice, you turn over everything that is not privileged. Furthermore, the statute requires that you provide everything in your “Possession, Custody and/or Control". That means the emails and texts on your employees' personal devices when used for business.

We need to understand what happened and that comes from the documents. E&O Defense counsel's ability to correctly assess the exposure, the % of success and damages is dependent on applying the law to the facts as the documents show. Your E&O carrier will then set reserves and decide on settlement, litigation or mediation, based on that reporting. Support for Pre-Answer dismissal motions or eventual summary judgment motions is based on the documents. Know that all great testimony will ever do is create a “Question of Fact" for a jury to decide at a trial. Something we try to avoid.

You must review your document retention procedures. How are they Kept/Saved? Named? Organized. Where are they saved? When are they saved?....days later or at the time they are created? While it may seem labor intensive to have your office follow good E&O procedures, it pales in comparison to the financial consequences of an E&O claim…even one that is won let alone one that is lost or settled for an amount that otherwise could have been much less. I cannot tell you how many times I have heard … “I know the insured signed the application. I just have to find it"…and they never do. While that was true in the stone age of paper, it is more true today.

Submitted by:

Howard S. Kronberg, Esq.

Kaufman Dolowich, LLP