#avoiding lawsuits

[howtohero]

#003 Codenames

One of the most important things about establishing yourself as a superhero is picking a kick-butt, awe-inspiring, codename. A good name is what separates world-famous-beloved-by-all-even-cranky-old-people heroes from who-are-they-I-never-heard-of-them-and-I’ve-been-on-the-internet heroes. Having cool superpowers means literally diddly-squat (and not in the figurative sense we’re talking literal diddly-squat here) if you don’t have a cool name to go with it; likewise, a cool name can elevate a hero with lamer powers into a household name. Nobody cares if you have the powers to summon time-displaced dinosaurs if you’re going by the name Professor Paleontologist, but a name like Nightron captures the imagination even if your only power is the ability run slightly faster when it’s night time.

When picking a codename there are many things you’re going to want to consider. For starters you want to remember that one of the main reasons to even take a codename in the first place is in order to keep your real identity a secret. So you definitely don’t want to choose a codename that contains references to your actual secret identity real name. That means no using your actual name anywhere in the name (don’t use Nightron if your name is actually Ron, or Night). No making puns based on your name (Professor Paleontologist is especially off-limits for people who like dinosaurs and are named Leon!) And, if you want to really go the distance in terms of protecting your secret identity, don’t even reveal your gender in your codename. None of this Noun-Man or Adjective-Woman or Mr. Who-What or Ms. Where-Why nonsense, if you pull this garbage you’re already disqualifying approximately 50% of the planet, your enemies are that much more likely to find out who you really are.

You also want to make sure your name is easy to pronounce and easy to exclaim in excitement. Keep it short, two words at most, the fewer syllables the better. Alliterative names are a good idea, they’re easy to remember and roll off the tongue well, for the most part. Beware of falling into the tricky tongue twister trap. You want people to be able to say your times five times fast, in the event of an emergency. Rhyming names are also fun and easy to remember. But watch out, rhyming names are especially susceptible to puns and clever word play. Heroes with rhyming names are that much more likely to be made fun of by late night talk show hosts or tabloid magazine headline writers (I imagine there’s just one guy whose sole job it is to come up with clever headlines, I bet he makes good money too.) On the flip-side of that you might want to consider a name that’s easy to rhyme things with. This way people can write odes and ballads about your impressive feats of heroism so that they can be remembered for all time.

Another pit you need to avoid falling into is that of the fraudulent job title. Don’t stick military rankings like captain or general or chief petty officer into your name cuz that’s just opening the door for the full weight of the military to come down on your star-spangled boxer briefs… Not like legally since impersonating a military officer is not a felony but like the army might resent you and say mean things about you to their friends and that is not good for you public image! 

When you go about picking your codename you need to do some background research first. To start you’re going to want to make sure that no other crime fighters are already using the name you’ve picked out. You never want to accidentally step on another hero’s toes or hurt their reputation (or let them ride on your coattails) by using the same name as them. Plus, that’s just going to lead to awkward confrontations later when another superhero accidentally sends you an invitation to a new team or a pool party that was meant for the other hero with whom you share a name. You also need to make sure a supervillain isn’t already using that name. If there’s anything worse than sharing a name with another hero, it’s sharing a name with an arsonist or a breaker and enterer or an evil undead zombie witch! You want your name to inspire hope, not fear, and you also want to avoid any confusion with law enforcement or with other heroes who might think that you’re just the villain in a new costume or something. Originality is key. 

Not only do you have to make sure you’re not stealing another hero or villain’s name, you also need to make sure you’re not taking the name of any trademarked or highly recognizable product or location. If you’re not careful about this you’re leaving yourself wide open to corporate lawsuits, which can be costly, time consuming, and, damaging to your superheroic image. Nobody is inspired by seeing someone in a cape and mask in court. Honestly you’re probably running the risk of being held in contempt if you show up like that, forcing you to either reveal your secret identity to the court, or be arrested. Neither of these scenarios is something you want. Obviously. The best way to get around any legal hassles is to go with an out of the box spelling of your name. Replace all the c’s with k’s, all the i’s with y’s, throw in some x’s, some z’s, some numbers, turn your r’s backwards like you’re a toy store, go crazy with it. The more outlandish the spelling the less likely you are to run into any of the problems I have painstakingly laid out for you here. And the more hip you’ll be with the youngsters and their texting language. It’s important to be hip with the youngsters. 

Once you’ve got a name picked out (heres to you Ny™@R3, the talking nocturnal horse that keeps our streets safe and clean) you’re just about ready to start saving reporters from falling out windows and babies from burning buildings (the babies are inside the burning buildings they are not the ones burning the buildings). After all, the first step to success in any career is making a name for yourself. 

[actuarylaw]

ASOP 41 and clear communication

There is an article in the September/October issue of Contingenicies regarding Actuarial Standard of Practice 41 on Actuarial Communications which became effective on May 1, 2011.   This standard applies to all actuarial disciplines and concerns how actuaries express the results of their work to the users of that work.  The article, titled Let's be Perfectly Clear, was written by James Gutterman, FSA, who is currently a member of the ABCD.  Gutterman offers some thoughts about how to handle disclosing materials which were relied upon in developing actuarial estimates, and how to handle the situation of a principal who directs the actuary to use an unreasonable assumption.  

For the latter situation, Gutterman states:

Once again, it comes down to the clarity of an actuary’s communication and appropriate disclosure of his or her views concerning the assumptions used. One possible approach here—in addition to stating prominently (not burying it in a footnote to a supporting exhibit in the report) that use of this mortality table is unreasonable—would be to assert in writing that the report should be provided to others only in its entirety. In this manner, when journalists from the local XYZ Tribune look at the actuarial report, they will be able to recognize why liabilities suddenly have decreased by 50 percent, why the plan actuary used a particular table, and why that actuary considers its use to be inappropriate.

It's good advice.   No one ever got in trouble for being too complete, or too descriptive in explaining all the assumptions, data sources, and techniques used in developing a set of actuarial estimates.   Always err on the side of saying more.  

[actuarylaw]

Limiting Distribution of Work Product -- Avoiding Actuarial Malpractice

This is part of an ongoing series of tips for managing the risk of exposure to professional liability lawsuits.

As a general proposition, actuaries should only be liable to their clients, that is, the persons who are paying for the actuarial work product.  If an actuary does not limit the client's ability to distribute her work to third parties, the actuary may in some circumstances find herself exposed to professional negligence claims by third parties who received and relied on the work.  The basic risk management step to avoid this kind of a liability to third parties is to prohibit the client from distributing your work without your prior written consent.  The condition for giving your consent will be an agreement by the third party that the third party will not bring any sort of claim against the actuary arising out of the work.  After all, if the third party is getting this work for free, why should they get the right to bring a suit for thousands or millions of dollars?  In situations where obtaining such consent is impossible or impractical, a risk management approach is to obtain the client's agreement to indemnify the actuary for any liability or expense related to a claim by third parties.  

Sometimes actuarial work product is prepared for filing with a government entity such as a Statement of Actuarial Opinion or pension plan's Form 5500.  In these settings, the actuary should make clear that his work is intended solely for the internal use of company management and for the purpose of the filing, but for no other purpose. 

[sherylnakano]

So I've been a negligent blogger, a poor communicator, and a hermit loner.  Don’t even get me started on Facebook updates.  My links and stories are not exactly current, but still interesting yes?  Hey, this is what happens when you're working (which as a consultant is great), traveling and volunteering all over the city (hello good karma!)

Today’s fantastic post, reminds us why a sharp collection manager e.g., SHERYL NAKANO is a good investment.  Seriously, WHO LOSES THEIR CERTIFICATE OF AUTHENTICITY?!   Moral of the story?  Don’t get sued, just contact me…

[actuarylaw]

Limitation of Liability Clauses -- Avoiding Actuarial Malpractice

This is part of an ongoing series of articles on tips for avoiding being a defendant in an actuarial malpractice case.

It is a basic fact that actuarial estimates often involve projected liabilities in the millions or even billions of dollars.  A claimed mistake by the actuary can result in an equally large exposure.  See, e.g., the claim by the State of Alaska against an actuarial consulting firm for $2.8 billion.  It is reasonable for an actuary to negotiate over the allocation of that risk among the actuary and the client.

In many circumstances, it will be appropriate for there to be a monetary cap on the maximum potential liability of the actuary for malpractice claims.  Such clauses will not be enforceable in a situation of intentional wrong doing by the actuary or, in some jurisdictions, where there has been gross negligence, but in the majority of jurisdictions a limitation of liability clause can be used to limit the exposure of a professional to negligence claims by his or her client.   Limitation of liability clauses can also exclude liability for lost profits or other types of "consequential" damages.

Proper drafting of a limitation of liability clause requires legal expertise.   Most lawyers practicing commercial law should be able to draft one for an actuarial firm's contracts.

[actuarylaw]

The Management Representation Letter -- Avoiding Actuarial Malpractice

This is the second in a series of posts on practical tips to avoid becoming a defendant in an actuarial malpractice lawsuit.

A useful risk management technique is the management representation letter.  A management representation letter requires that an appropriate representative of management acknowledge in writing the accuracy and completeness of data and other information being provided to the actuary.  Actuaries are not auditors and are not responsible for the accuracy or completeness of the information on which they base their reports beyond a duty to review such data for reasonableness and consistency.  (ASOP 23 - Data Quality).  Instead, the actuary is entitled to rely on information presented to him or her by company management.  It is useful to show that management has acknowledgment its responsibility for this information in a management representation letter.  

A management representation letter might take the format of a written acknowledgment that  "the data and information contained in data files x, y and z are accurate and complete to the best knowledge of corporate officer Smith."  The representation letter might also contain management's written responses to a series of inquiries made by the actuary about items relevant to the actuarial analysis being performed.

Actuarial Standards of Practice often include a statement that the actuary should "inquire" about particular items or facts that could have impact on the actuarial subject being examined.  See, e.g., Actuarial Standard of Practice No. 43, section 3.5 (dealing with inquiries concerning the company's claims handling practice).  While such a duty of inquiry can be met simply by an oral conversation with an individual within company management, you may get management to take its obligations more seriously if they are asked to respond to such questions in a signed document.  For the sake of convenience to the client, you could walk through the inquiries orally, prepare a document which contains the answers received orally from management, and then have management review and sign the representation letter.  At the end of this process, you will have a clear record of having made the inquiries required by the Actuarial Standards of Practice and showing the specifics of the information on which you relied in preparing the actuarial analysis.  

[actuarylaw]

Know Thy Client -- Avoiding Actuarial Malpractice

This is the first in a series of tips about practical steps to reduce the risk of being a defendant in an actuarial malpractice lawsuit.   

One of the basic steps in avoiding malpractice claims if you are a consulting actuary involves client screening and selection.  Clients vary with respect to the likelihood that they will be the source of a malpractice claim against you.  For example, a client who has sued its professionals in the past is more likely to be a client who may bring claims against professionals, including you, in the future.  A client who has been "fired" by its prior professionals, who resigned from their engagement, may be a client who is uncooperative in working with its professionals or who refuses to follow the professional advice which it has received.

A client's financial status can also be an indicator of a riskier client.  Very frequently, when an insurer or other entity goes into receivership or bankruptcy, the receiver or trustee is likely to bring claims against outside professionals asserting that those outside professionals took some action which contributed to the insolvency.  Such claims are becoming almost the standard of practice for insurance receivers.  Therefore, it is important that you be aware of the client's financial status and recognize that a client who might be in a zone of insolvency is a client for whom you should be particularly careful.  

Another client characteristic to screen for is the client who has had prior legal or regulatory trouble.  A client who has previously been convicted of crimes or subject to regulatory action, particularly action which involves areas where you will be involved as the actuary, is a client you may want to consider hard before agreeing to provide actuarial services.  

There are a number of resources available to assist you in performing such client screens.  Searches on Google on the internet can provide a wealth of information.  Review prior regulatory filings by the prospective client.  Learn the identity of prior professionals and have a discussion with those professionals if possible before you are engaged.  Obtain a Dunn & Bradstreet report on that client.  

In summary, do your due diligence before agreeing to be the actuary.