Guidelines for Using Our Risk Management Plan

Introduction

Many lawsuits can be avoided if legal counsel is available at an early stage of the dispute. Your Risk Management Plan has been expressly designed with this goal in mind. This is accomplished by providing you access to a statewide network of attorneys and professionals with expertise in Real Estate law and dispute resolution techniques.

How to use the service

You can access our Lawsuit Prevention Service via our Hotline at 800-937-6526 during normal business hours from 8:00 am to 5:00 pm., Monday through Friday. Our Plan Administrator will ask for information about the dispute and send a “Legal Incident Report” for you to complete if you have not already done so. This will help our attorneys to respond quickly and preserve your memory of details.

You will then be contacted directly by a panel attorney for a telephone consultation (of up to 30 minute) within 48 hours of your notice of a dispute. Your Broker will receive a “Client Confirmation Sheet”, soliciting additional information concerning the ultimate disposition of the matter. Please complete it and return it by fax or mail so that we can track the need for further services.  All council with Attorneys must be with the Broker, Manager and Agent present.

When to use the service

Benefits under your Risk Management Plan are triggered by the occurrence of a dispute. It can arise verbally or in a more formal, written form. A dispute can be characterized as a claim by one of the parties that she/he has suffered some form of economic damage as a result of someone’s improper handling of the transaction. The claim does not necessarily have to be made directly against the Agent; the Buyer could make it to the Seller and visa versa.

It is helpful to distinguish these disputes, which are covered under your Plan, from the garden variety of transactional issues that arise during the negotiation stage. It is not uncommon for one party to attempt to gain leverage by making threats of a lawsuit if his/her terms are not met. We view this as the normal and customary course of business within the scope of our lawsuit prevention service. These matters are usually resolved “in house” between Agent and Broker.

Benefits provided for threats & demands-by stage

When the dispute is still at a verbal stage i.e.; what we refer to as stage “1 threat”, our customary response is to arrange for a phone consultation with one of our panel attorneys. The attorney will review the individual facts of the dispute with you and offer their advice and counsel to resolve or eliminate the dispute.

RERM’s role in resolving the dispute and fully informing them of the comprehensive coverage you have as a member of our service. Also, as part of the Plan, the Agent can have up to eight pages of legal documents that pertain to the threat reviewed by the attorney.

A second, follow-up letter will be sent by our attorney to counter-attack any reply by the adverse claimant to our first letter. A one-hour, in office consult with our panel attorney may also be arranged for at this stage, depending on the seriousness and complexity of the particular matter. If the matter is appropriate for mediation, RERM will pay your share of the Mediator’s fees (five hours maximum or $750.00) or, alternatively, pay for five hours, or $750.00, of legal representation at the Mediation.

Responding to lawsuits

Occasionally, a lawsuit may be filed and served on you “stage 3”. Under the terms of your Agreement, you must notify RERM and forward copies of your transactional file to RERM within ten days of service. If you are covered by an E&O policy, you must separately notify the carrier of the lawsuit (please check your individual policy for reporting requirements).

RERM and your E&O carrier will then conduct their own investigations regarding benefits and coverage. If your E&O carrier concludes the matter is covered, they will give it a claim number and assign it to a defense attorney. It will then be your responsibility to provide RERM with a copy of the carrier’s approval letter (which is a condition for benefits under our plan).

If the matter is determined by RERM to be a covered lawsuit, then RERM will pay for legal fees and court costs, up to the limits of your coverage, to meet your E&O Deductible.

Giving notice and getting preauthorization of services

You are required under your Risk Management Plan to notify RERM by phone and in writing within ten days of receipt of any and all disputes or filed lawsuit, including demands for mediation and/or arbitration. Failure to report such a threat or suit may void your coverage, including payment of your E&O deductible, on this particular legal matter.

Whenever a letter and/or an in-office consultation is to be provided, RERM must give written pre- authorization for these services after consulting with the agent and the panel attorney. For that reason, Agents should never attempt to contact a panel attorney directly to report a dispute or request legal services. To do so creates confusion in the mind of the responding attorney and the likelihood that the Agent will get billed directly for these services.

If additional services are needed that are outside the scope of covered benefits, the individual Agent has the option of retaining the attorney privately at the attorney’s preferred hourly rate. In such instances, it is the Agent that assumes personal responsibility for all services rendered by the attorney, not the Broker (unless the Broker expressly agrees to do so). The consulting attorney will always advise the individual Agent when additional services may result in costs not covered under their Risk Management Plan.