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Aon Risk Solutions Specialty | Professional Services
Risk. Reinsurance. Human Resources.
Professional Services Find out what’s been happening within the Professional Services insurance and risk sector this summer, from client events, to community days to the latest news and hot topics within the insurance industry.
Lateral hiring red flags The steady increase in lateral hiring continues despite evidence that only 50% of the lateral partners hired break even financially, and many move on to other firms within a few years.
Whatever one’s view of lateral hiring the professional liability, employment and management liability risks that some lateral candidates pose can be all too easily ignored by the hiring firm.
Firms that have recruited laterals who have exposed them to liability of one form or another, or to professional embarrassment or reputational harm, would doubtless like to turn back the clock and avoid the trouble that befell them. We cannot turn back the clock, but we can identify some risk-related potential red flags in the lateral recruitment and hiring of lawyers. We recognize that many of these red flags do not necessarily signal disqualifying problems in all instances. The essential point is that red flags should either be heeded or lowered only after reasonable inquiry.
Job hopping and short tenure
Senior lawyers may move every few years because their personalities or practice habits make them disruptive colleagues. Junior lawyers may have to move every couple of years because that is often the amount of time it takes for their lack of competence to be fully recognised. On the other hand, lawyers may have good reasons for their moves and prove to be valued colleagues. Distinguishing between these categories of lawyers requires careful investigation.
CV gaps and CV fraud
Gaps in a candidate’s chronological employment and education need to be explored. Lateral candidates may also engage in other forms of CV fraud e.g. claiming fictitious degrees The lateral sued their previous employer(s)
Surprisingly, some firms do not ask whether lateral candidates have ever sued their previous employer(s) Laterals going it alone
Laterals who are recruited for their client base frequently want to bring colleagues with them. Laterals who prefer to go it alone may be a risk because they could have personality traits or styles that alienate colleagues Disciplinary history
Lateral candidates should be asked about any disciplinary history and it should be investigated
Your people know the candidate and have
serious doubts
There have been a number of cases where the firm’s leaders dismissed their own lawyers’ concerns. In one example the lateral, while successful from a business perspective, was a problem in most other respects and eventually left the firm (and has since moved a further three times in a short period).
Lateral hiring is an essential feature of many law firms’ growth strategies. Unfortunately, some laterals bring with them professional liability risks - we have identified some red flags that may signal such risks. History teaches that these decisions need to be made carefully and objectively, and that the cost of misjudgements may be substantial. To view the full article written by Douglas R. Richmond, Managing Director, Aon Risk Solutions, please e-maill Sam McSweeney.
Risk Bulletin – Summer 2015
Aon Risk Solutions Specialty | Professional Services
Risk. Reinsurance. Human Resources.
Employment Practices Liability and Management Liability Seminar On 29 April, Aon hosted its 6th annual Employment Practices (EPL) and Management Liability (ML) Seminar in London. The seminar was aimed at professional firms and was very well received. The EPL panellists were Helga Breen, partner and head of Employment at London DWF LLP and Kate Brearley, partner and head of the Employment team at Stephenson Harwood LLP. Helga focused on the practical impact of Clyde & Co LLP v Bates van Winkelhof on professional services firms. Following this case professional service firms will need to consider the status of their members and partners and the new rights available to those deemed ‘workers’. Kate addressed the challenges of unlawful business competition and how to address them contractually. Kate highlighted the importance of ensuring that contracts of employment appropriately incorporate concepts such as garden leave and restrictive covenants. She also focused on the importance of due diligence around lateral hires. Grant Foster, head of the Risk Consulting team in Aon Global Risk Consulting moderated the second panel, together with Scott Nicholl, Head of Risk, Hogan Lovells International LLP and Andrew Cheung, General Counsel of the UKMEA Region of Dentons London who were guest contributors. Incorporating findings from the Aon Global Risk Management survey* and Risk Maturity Index*, Grant explored the challenges to the implementation of risk management in the professional services sector. The panel discussed the risks they are focussing on in their firms, their use of the risk register and the key stakeholders in the business when it comes to risk. *For a full copy of these reports, please visit aon.co.uk/professionalservices and visit our ‘Downloads’ section In the concluding part of the seminar, Aon shared some benchmarking data and purchasing statistics based on Aon's professional services firm clients, together with an analysis of claims activity. Some of the key statistics, all based on
UK-headquartered professional services firms that buy EPL and ML insurance over the past five years, were: 83% of all claims and circumstance
notifications are EPL, while 17% are ML
22% of matters notified to insurers resulted in payments; of these matters, 22% were resolved for more than £100,000
75% of claims arise out of the UK; with the rest coming from a variety of countries, with the highest percentages in France at 8% and Hong Kong and Dubai at 3% and 2% respectively
14% of claims are brought by partners, while another 50% are brought by non-partner lawyers
Wrongful Termination / Treatment is the most common allegation
Claims often include multiple allegations including Discrimination and Harassment
Aon’s “Live Cyber Attack!” Seminar On 30 June, Aon hosted a Cyber Seminar, featuring a “Live Cyber Attack” in the new Aon Centre, with over 50 individuals representing 48 law and accountancy clients and prospects attending. The focus of the event was on the specific issues of professional services firms, providing a new and valuable outlook for our audience. During the first session, moderated by Professor Dr. Marco Gercke, Director of the Cybercrime Research Institute, a panel of volunteers from the audience played the roles of a senior management team in a fictional global professional services firm. During a simulated attack, Marco asked the panel how they would react in a series of complex and realistic cyber attacks and to recommend a course of action, the consequences of which were reviewed by Marco in detail, in a debriefing session. Following the simulation and debrief, Jennifer Millar from Aon moderated a Q&A session with Marco, Stephen Tester, partner from CMS Cameron McKenna LLP and James Tuplin, TMT Portfolio Manager, Financial & Specialty Lines from QBE Insurance (Europe) Ltd during which they addressed
Aon Risk Solutions Specialty | Professional Services
Risk. Reinsurance. Human Resources.
audience questions concerning how to evaluate cyber risk, cyber insurance coverage and risk mitigation.
Ponemon Cyber Impact Report Aon recently sponsored the Ponemon Cyber Impact Report which was released in June 2015. The research is based on the relative financial impact of losses arising from Cyber exposures compared to exposures to more traditional tangible assets, based on a survey with EMEA executives and risk, IT and legal professionals. The key findings from the report are as follows:
Information technology assets are 38% more exposed than property assets, with 11% of potential loss to intangible assets covered by insurance, compared with 49% for tangible assets
This is despite the fact that estimated value and maximum loss is on a par for intangible and tangible assets (e.g. probable maximum loss of USD638 million and USD615 million respectively)
Almost four in ten (38%) of businesses surveyed experienced a material or significantly disruptive loss relating to a security or data breach in the past 24 months. The average financial impact of these incidents was USD1.1 million
Click here to view the full report
Who’s who in our team… Name: Michelle Engelbrecht
Role: Client Manager
I started my insurance career in 2004 after responding to an advertisement for a Sales Position. After specialising in the transport sector, I eventually ended up with a diverse portfolio from manufacturers to
financial services. I moved into a management role at an underwriter 2 years later. Aon approached
me in 2009 to take over the assistant branch manager position in Cape Town with a diverse client portfolio and another steep learning curve.
Have you worked outside of the insurance industry?
I started my work career as a telesales person for a German company manufacturing dot matrix printer ribbons (anyone remember those?). Eventually I started my own business buying and selling computer accessories and that was probably the single biggest challenge I have ever taken on – starting a business from scratch in a new town. I like to think this gave me a great foundation for understanding the role of the client as well as the supplier.
What prompted you to move to Aon UK?
In 2012 I had the privilege to partake in Catalyst, one of Aon’s Global Leadership Courses and I was struck by the vastness of our organisation – not only geographically but also in terms of what we can offer clients. Once back in Cape Town, I was itching to get closer to the heart of the business and to learn more, so when the opportunity to move to London presented itself, I grabbed it with both hands.
What do you hope to bring to the Team?
The more diversity a team has, the better equipped it is to deal with the variety of clients that Aon serves. I have a strong Property & Casualty background and an added bonus is that I have moved around different business units within our London office, so I come with a good network of people within our own organisation. And lastly, but by no means least of all, my charm and sunny disposition!
Global Service Day On June 11, thousands of colleagues in more than 40 countries and nearly 150 cities across the globe volunteered in their communities to celebrate Aon's mission to empower economic and human possibility by developing human potential, aiding communities at risk and improving health.
Aon Risk Solutions Specialty | Professional Services
Risk. Reinsurance. Human Resources.
Our Professional & Financial Services Team in action!
LR: Mike Eld, Richard Berry, Michael Earp, Amit Bhavra, Beverley Alderson, Nadia Mirza, Sarah Kadhir, Ed Johnson, Sophie Minhas, Jonathan Breaden, Julia Pescud, Steve Cornell, Nadine Semaine, Abi Smith & Sam McSweeney
Aon’s 2015 Global Risk Management Survey
The respondents of this year’s Global Risk Management Survey (which include over 1,400 public and private companies around the world) were asked to rank the most formidable risks facing their companies.
The top 10 risks identified in this year’s survey are:
1. Damage to reputation/brand
2. Economic slowdown/slow recovery
3. Regulatory/legislative changes
4. Increasing competition
5. Failure to attract or retain top talent
6. Failure to innovate/meet customer needs
7. Business interruption
8. Third party liability
9. Cyber risk (computer crime, hacking, viruses, malicious codes)
10. Property damage
To view the full report please click here
Contact information Jennifer Millar Executive Director Aon Professional Services +44 (0)20 7086 4816 [email protected] Giles Bentley Executive Director Aon Professional Services +44 (0)20 7086 1870 [email protected] Andrew Newton Executive Director Aon Professional Services +44 (0)20 7086 0132 [email protected]
About Aon Aon plc (NYSE:AON) is a leading global provider of risk management, insurance brokerage and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 69,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative risk and people solutions. For further information on our capabilities and to learn how we empower results for clients, please visit: http://aon.mediaroom.com.
The information contained herein is based on sources Aon believes to be reliable; however, Aon does not guarantee its accuracy. It should be understood to be general risk management and insurance information only. Aon makes no representations or warranties, expressed or implied, concerning the financial condition, solvency, or application of policy wordings of insurers or reinsurers. The information contained in this publication provides only a general overview of subjects covered, is not intended to be taken as advice regarding any individual situation, and should not be relied upon as such. Statements concerning tax and/or legal matters should be understood to be general observations based solely on our experience as risk consultants and insurance brokers and should not be relied upon as tax and/or legal advice, which Aon is not authorized to provide. Insureds should consult their own qualified insurance, tax, and/or legal advisors regarding specific risk management and insurance coverage issues. This document or any portion of the information it contains may not be copied or reproduced in any form without the permission of Aon Risk Solutions. Reproduction permitted with written authorisation. Registered Office: The Aon Centre, The Leadenhall Building, 122 Leadenhall Street, London, EC3V 4AN. Registered in London No.210725 VAT Registration No.480 48. Aon UK Limited is authorised and regulated by the Financial Conduct Authority. FPPSG.9.08.15 © Copyright 2015 by Aon UK Limited. All rights reserved.
