C.A.R.'s Strategic Defense Program provides a powerful assembly of experienced and seasoned attorneys joined together to focus on improving the current litigation climate in California, as well as to address the Errors and Omission Insurance dilemma in the state.
As the final component of C.A.R.'s three-pronged approach to Legal Service for members consisting of the already established Legal Hotline (Pre-litigation level) and Amicus Brief Group (Appellate Level), Strategic Defense is positioned as the middle prong, assisting members when a lawsuit has been filed and/or the member requires legal representation (The Litigation Phase).
Through its innovative Defense Attorney Referral Panel Program, Strategic Defense provides the membership with both direct assistance through the Defense Attorney Referral Panel in providing a list of seasoned attorneys that can defend a claim or lawsuit, as well as indirect assistance through its prized Risk Management Seminar Series where Panel Attorneys provide valuable insights and strategies to minimize the legal exposure of REALTORS®.
In addition, the Defense Attorney Referral Panel will also be utilized as a collective think tank, charged with the task of providing solutions to the present issues REALTORS® face in the litigation arena. This use will be accomplished through the Defense Litigation and Claims Repository and through a series of strategic defense meetings between the Defense Attorney Referral Panel and the C.A.R. Legal Department.
C.A.R.'s Strategic Defense Program was created in accordance with the recommendations from the Errors and Omissions Insurance Task Force. This very important Task Force was created by the leadership of C.A.R. in the fall of 2003 and charged with identifying and investigating a variety of mechanisms for the purpose of increasing the long-term availability, and ensuring the affordability of, Errors and Omissions Insurance for California REALTORS®, including legislation, member risk management programs and internal and external business opportunities.
In its final report, the Errors and Omissions Insurance Task Force created both the Defense Strategy Advisory Committee and the Strategic Defense Program. The Advisory Committee was to further investigate risk management issues and make recommendations for solutions to this important issue. The Strategic Defense Program was created to implement the recommendations of the Task Force.
A. FINAL REPORT - ERRORS AND OMISSIONS INSURANCE TASK FORCE
The Errors and Omissions Task Force was appointed in the fall of 2003 to explore ways in which C.A.R. could improve the cost and availability of Errors and Omissions Insurance for its members. The Task Force utilized a wide variety of resources, including both C.A.R. and NAR staff, and retained a professional consulting firm, Murray and Associates.
While it is unlikely that there is any single solution with a realistic chance of success, the Task Force made recommendations in three primary areas--all of which are designed to improve the litigation climate for REALTORS® and thereby improve their ability to purchase insurance at a reasonable cost.
The Errors and Omissions Insurance Task Force approved the following recommendations:
That C.A.R. create a "Defense Strategy Advisory Committee" to include 11 members as follows:
The chair, vice chair, or member of the Association Executives Committee;
The chair, vice chair, or member of the Consumer Protection Forum;
The chair, vice chair, or member of the Legal Action Fund;
The chair, vice chair, or member of the Legislative Committee;
The chair, vice chair, or member of the Standard Forms Advisory Committee;
Six directors to serve as members at large to serve staggered 3-year terms; and
Committee appointees to serve for the year of their respective appointments.
That the Defense Strategy Advisory Committee creates a working group with the Standard Forms Advisory Committee to examine inclusion of risk management language in the Residential Purchase Agreement and/or related transactional documents.
That the Legislative Committee consider for inclusion in C.A.R.-sponsored legislation a measure to create a "certificate of merit" requirement for lawsuits against real estate licensees that is modeled after the existing rule for Architects and Engineers. The rule should include standards for experts that include licensure, current practice and management experience.
That the Legislative Committee consider for inclusion in C.A.R.-sponsored legislation a measure to create a statutory requirement for 60 days notice of a claim to a broker who is a prospective defendant before a lawsuit can be filed.
That the Legislative Committee consider for inclusion in C.A.R.'s advocacy program a new rule or regulation governing reporting of claims to insurers that will allow a 60 day "window" period in which to resolve a claim before it can be counted against a broker's or real estate firm's claims/loss history, as long as the settlement does not result in a payment by the insurer.
B. GOALS OF THE DEFENSE STRATEGY ADVISORY COMMITTEE
To provide education outreach to our members on Risk Management Issues.
To explore the use of a risk management video and/or corresponding handouts to be used at local association new agent orientations. The video and handouts should incorporate recommendations on standard forms to use along with the reason for those recommendations (i.e., information on issues that have caused agents to be sued and helpful tips to reduce REALTOR® risk and exposure.
To promote a better understanding of the tools available to members from C.A.R. For example: educate members on the standard forms and why their use is important and on other services that relate to risk management and how to utilize them.
c. To utilize the Defense Attorney Panel through a series of creative seminars to provide important and practical knowledge to the brokers regarding the pitfalls (and mistakes made) which generate the present litigation.
2. To recommend to the Standard Forms Committee and the WINForms® Working Group the "packaging" of forms or changes to the forms that will lead to better risk management protection for our members.
3. To research trends and causations of lawsuits against our members. Once compiled, the information to be disseminated to our members along with recommendations on how to prevent future risks.
To provide the membership direct access to a C.A.R. chosen and endorsed Panel of pre-eminent real estate broker defense attorneys at a discounted rate which will serve in the short run to substantially enhance brokers ability to defend the cases they are facing and in the long run, serve as a deterrence to the plaintiff's bar.
To utilize the established Defense Attorney Panel in an alliance capacity by creating a repository program designed to share sensitive defense information and by instituting brainstorming meetings for the Panel to meet several times over the course of a year. The sole focus of this collaboration will be to evaluate and strengthen established defense strategies employed in present litigation and claims handling and to determine other potential areas where brokers may be vulnerable to liability.
To make recommendations to the Legislative Committee on Risk Management Issues.
To help members obtain lower-cost E&O Insurance.
To develop Risk Management Training Programs that would involve a certification that would meet a standard to encourage the insurance companies to offer lower rates.
To coordinate with Relay®, C.A.R.'s Transaction Management Platform, to help reduce member risk/exposure through better file management, transaction logging, and accountability.
To explore other avenues as they come up that will help us strive toward reducing REALTOR® risk and/or the cost of E&O insurance.
Keeping in mind that insurance rates and access to insurance carriers in the area of Errors and Omissions Insurance in California is directly affected by the number of claims, size of awards, and settlements paid out, the goals of the Defense Attorney Referral Panel Program focus on improving the litigation climate in this area of law.
The Program's goals are:
To reduce overall claims by educating REALTORS® of potential risks inherent in the real estate transaction and by providing them practical tips and strategies so they are better able to avoid making mistakes (both substantive and procedural) which lead to this type of litigation.
To assist REALTORS® in the defense of their claims, by providing access to the best E&O defense attorneys available in California.
To utilize the Defense Attorney Referral Panel in a collaborative capacity for the purpose of anticipating and identifying new areas of potential real estate vulnerability in the E&O insurance arena as well as enhancing overall defense capabilities.
To create and maintain a Claims and Litigation Defense Repository to be used by the Panel attorneys with their ongoing cases and by C.A.R. in furthering the goals of its members.
The Strategic Defense Program is comprehensive in creating mechanisms which will address both the prevention of lawsuits, as well as helping those REALTORS® who are subject to claims and litigation. The five essential components of the Program are as follows:
1. The Defense Attorney Referral Panel
2. The Risk Management Seminar Series
3. The Litigation Defense and Claims Repository
4. Defense Attorney Panel Strategy Meetings
E&O Insurance Available to REALTORS® through AIG-
Through the C.A.R. program, a 50% reduction in the deductible that the broker/insured pays is offered if the broker used the relay® Transaction Management program or a home warranty was issued by American Home Shield® or Fidelity National Home Warranty on the transaction for which a claim was made.
The Defense Attorney Referral Panel will be the centerpiece of this new program. It is through the creation and sponsorship of this Panel that we will mobilize our efforts to create interest in, and support for, changes in the litigation landscape in the area of errors and omissions insurance defense.
Specifically, for those REALTORS® subject to existing E&O claims and/or lawsuits, C.A.R. will provide access to the Panel, which will be comprised of approximately 20 experienced litigation defense attorneys with proven track records and on the forefront of E&O insurance defense.
Again, these are pre-eminent attorneys with substantial experience in E&O claims and real estate broker defense litigation. The attorneys selected for inclusion on the Panel will be the recommended counsel to 175,000+ members, as well as, to the insurance carriers that associate with C.A.R. For their part, these chosen attorneys will assist the Defense Attorney Referral Panel Program in the following areas:
Provide a discounted rate on their litigation services to C.A.R.'s membership. (Defense Litigation Attorneys only)
Participate in C.A.R.'s Risk Management Seminar Series designed to educate the real estate community as to the pitfalls, risks and legal ramifications involved in real estate transactions.
Contribute to C.A.R.'s initiated Litigation Defense and Claims Repository designed for use by C.A.R. and the Panel to enhance overall defense capabilities.
Participate in periodic Defense Attorney Strategy Meetings, designed as collaborative brainstorming sessions which will serve to both enhance overall defense capabilities and for C.A.R.'s use in its many areas of involvement, including but not limited to, Standard Forms, Education, and Legislation.
Provide settlement information regarding claims handled in the area of broker liability.
Assist in any further duties and responsibilities that C.A.R. or the Panel may reasonably request in furtherance of their stated goals.
Membership on the Panel will be made by committee and candidates for the Panel will be subjected to rigorous background checks and interview process. Selected attorneys on the Panel will serve for a three (3) year period and be subject to renewal on a three-year basis and C.A.R. reserves the right to terminate membership at any time.
This education component is designed to ultimately prevent lawsuits and claims from being filed against REALTORS®. The series will focus on real estate brokers and their agents (including those brokers and agents who are new to the real estate field) and provide them with practical information about risk management realities in their profession. This matter-of-fact education will better equip the real estate broker and agent to avoid the mistakes that lead to litigation. It will also provide them with the practical skill set required to resolve these issues before they develop into lawsuits. The Risk Management Seminar Series will be taught by members of the Defense Attorney Referral Panel under the supervision of the CALIFORNIA ASSOCIATION OF REALTORS®.
In a very real sense, the REALTOR® who is subject to litigation will now be armed with access to an experienced E&O defense attorney, who is, in turn, supported by the collective knowledge of the Defense Attorney Referral Panel itself. The Litigation Defense and Claims Repository will be a library of collected defense materials including, but not limited to, pleadings, motions and strategy briefs. The Panel attorneys will contribute their case files to the Repository. The documents will be held in a secure site and accessed only by the Panel for their use in pending cases and by C.A.R. for their use in assisting the needs of the membership.
In addition, a REALTOR's defense on the whole will be greatly enhanced by the collective efforts of the Panel in brainstorming defense strategies through a series of meetings with C.A.R. and other Panel attorneys (Defense Attorney Panel Strategy Meetings). The Strategy Meetings will be held 3-4 times a year and will serve as a venue for the Panel and C.A.R. to brainstorm defense strategies and to identify new areas of potential real estate litigation.