Danny Hughes

Insurance carriers aren’t out of the goodness of their hearts going to give you good ratings or good rates.

Chris Dreyer

If you’re looking to get the best possible deal for your malpractice insurance, you either need to know the market inside and out, or you need someone in your corner who does.

Danny Hughes

There are four main categories that people look at. They look at how many lawyers are you. They look at your claims the last five years. They look at your domicile. And then the fourth thing is the area of practice. There . Are other things but go in your ratings, but those four main things are the important parts of what we broker.

Chris Dreyer

You’re listening to Personal Injury Mastermind, the show where elite personal injury attorneys and leading edge marketers give you exclusive access to grow strategies for your firm. Danny Hughes is a partner at Thompson Flanagan, a premier insurance broker based in Chicago. He and his team specialize in malpractice insurance, specifically for plaintiff lawyers. And have worked with some of the biggest PI firms in the country. I had the pleasure of chatting with Danny about why malpractice insurance is so important, what factors determine your deal and how a firm like Thompson Flanagan can make the whole process. I’m your host, Chris Dreyer, founder and CEO of rankings.io. We help elite personal injury attorneys dominate first page rankings with search engine optimization. An important first step for any lawyer is to really understand the people around them, so I started by asking Danny for a quick summary of what Thompson Flanagan does and how he got involved.

Danny Hughes

Nuts and bolts we’re an insurance brokerage out of Chicago, we represent a white collar insurance. It’s called errors and emissions. As many people refer to it, it’s malpractice insurance, and I just celebrated 16 years on November 1st. I realized it when I was at a dinner in Florida. It’s funny how time flies when you pass an anniversary. But my background is… I was in the media world. I sold radio in a previous life before insurance and. I, as many people in the media business know, saw the writing on the wall in the radio business very early on. I could see the crash coming from oh seven when I was selling spots in oh five. And I decided as a young man who had no liabilities in my life, I guess you could say to jump off the high dive and join Doug Thompson and Larkin Flanagan who were starting a company, and I didn’t even know what they did for a living. And I just knew I liked them as people, and I knew I could be a part of something pretty cool early on. And I was the sixth or seventh employee of Thompson Flanagan of which were I think 80 plus now we are 17 years old and the transition was actually not that difficult. In media, I represented clients which were direct car dealers, whoever they were. And I also represented media buyers on behalf of their clients. So the brokering part of it was pretty simple actually. But it took me a long time and I’m glad I had some good teachers of how I came into the insurance business. It was a really the smartest thing I’ve ever done. And I have not done too many smart things, but that was the one smart thing I’ve done about.

Chris Dreyer

That’s fantastic. So you took the leap and you joined just, and you had that big surge and geez, you’ve worked with some of the biggest personal injury law firms in the U S if not the world. We’ll talk more about that, but I wanted to specifically, so you’re a specialist for specialists, malpractice insurance for plaintiff lawyer. How did you get drawn into that niche?

Danny Hughes

Yeah, we are. You know, that’s funny. That was my first tagline a specialist for specialists. We represent 700 law firms in about 40 states in a once a year. Insurance transaction that protects them from lawsuits. We also do employment practices, cyber liability, all of these things that ensure these law firms in case something bad happens. So I want to clarify, we represent am law on down. It took me about three years into the business. I met a gentleman out of Kentucky who invited me to speak to a group of people that had never been spoken to about insurance. And he had told me. A lot of the vendors in the plaintiff’s space, there are many of them that call on this universe. Right. And he said to me, we were sitting in the back of the room and he said, you know, Danny, no one’s ever talked about insurance with these guys. And I know it’s an issue once a year that they all deal with and it confounds them. And so I agreed to go speak to a group of people in San Francisco a month later. And I found a group of people for many reasons that I enjoy working with. But the biggest thing was I found a group of people that needed what I did for a living. They were misrepresented. And as attorneys can understand and get frustrated by people who have been misrepresented by other attorneys, I was very frustrated from the very start by how people represented plaintiff firms in the insurance market. Because as plaintiff firms sue insurance companies, they start off behind the start line in the first place. And that perception had nothing to do with reality of them running their business and running their practice and being a good risk, which is really what it’s all about for an underwriter is if you’re a good risk or not. And so I found a group of people that I liked a lot, for many reasons. Most importantly, as a business person, I found a group of people that needed my advocacy and it has not stopped since I started. It is a daily thing that, you know, we represent 30 insurance markets domestically and about 15 Lloyd’s of London syndicates, all out of Lloyd’s of London by 60% of our book is Lloyd’s of London, but in large law, Most of the plaintiff’s space is not Lloyd’s of London. Some of the large plaintiff’s spaces and we broker on behalf of about 325, 100% plaintiff firms to 30 domestic carriers. And we are truly a third party advocate for the planet firms. We are not beholden to the carriers. I like to point that out. We come across people that are beholding to carriers and the more money they place with the carrier, the more bonus they get at the end of the year. And you’re stuck with their quotes. If you’re with just one person we truly are not beholden to anybody. I approach 30 carriers. If I need to jump all at center court on behalf of all those firms that we represent. So, it was it was a true business need that I saw right away. And then once I got into the plaintiff’s space, I truly appreciate them as business people as entrepreneurs, as advocates. And it really meshed with who I was as a person I’m Rocky running upstairs. And I will always be that way. I will always be for the underdog if I don’t have any dogs in the fight and I’m watching sports, I’m going for the guy who’s not supposed to win, or the girl is not supposed to win. That’s just who my I am and my nature. And so it was a very easy transition. For me to want to help people that help other people. And I’m being very sincere about that.

Chris Dreyer

When you’re looking for the best malpractice insurance deal, it’s important to see the situation from an underwriter’s perspective. I asked Danny to explain the different factors that an insurance company considers when rating.

Danny Hughes

So when you’re insuring a law firm, which is what we’re talking about, basically is there are four main categories that people look at. Okay. They look at how many lawyers are you. They look at your claims the last five years, they look at your domicile. Even if you have offices everywhere, all over it’s the zip code, where your domicile is. So, if you’re in Chicago, cook county, if you’re in Philadelphia county, Dade county and Florida you’re rated within that spectrum. And then the thing is the area of practice. And of course, if you’re a hundred percent plaintiff, what matters within that universe is then how that plaintiff practice is broken out. If your SSD, I, if you’re, you know, I have drilled it down to my storytelling to the markets that the plaintiff firm on the surface all may seem the same, but as people know it is 100%. There are 20 different iterations within the plaintiff’s space, whether you’re the tip of the sphere, you’re a gatherer, you’re a mass tort or your class action, or you’re just all a hundred percent BIP. I firm, I break that down, but that’s all in the application. Those four things, your location. Number of attorneys five-year history and your area of practice. There are other things that go into ratings, but those four main things are the important parts of what we broker.

Chris Dreyer

That’s super smart. And I couldn’t agree more cause I’m really, you know, deep into the PI space. And like you said, there’s mass torts. There’s even, you know, the settlement type of firm versus the trial from where maybe the settlement firm has a little bit better cashflow and there’s just different challenges that each of these businesses.

Danny Hughes

In a way, their risks also reflects that as well. If you’re only going to trial three times a year, you’re a catastrophic lawyer. Yes. You go after large verdicts. And the adverse thing is making a mistake on a large potential burden. But also, if you’re only going to court three times a year, the chance of you blowing a statute or mess it up a file is a lot less likely than the adverse.
If you’re going, you know, you’re representing 300 clients in a year there’s pluses and minuses to all those kinds of areas of practice. But I like to find the pluses.

Chris Dreyer

What are the different forms of malpractice suits that you see an attorney can face some of the common?

Danny Hughes

I think some of the most common things are the blown statute is number one for a plaintiff firm. They’ll pick up a case. You know, if someone’s been kicking down the road with five other firms or they have three months to file, there are red flags and yes, you got to run a business and you see an opportunity there. I get it. I’m all about advocating however you need me to advocate. But the common thing we see within the plaintiff’s space specifically is long stat. Failure to sue one of the defendants. Cause there may be multiple defendants. You don’t sue in the correct jurisdiction. You’re filing a lawsuit where the accident happened and you know, the state requires you to do it where they’re domiciled. I am not a lawyer, but I can tell you, those are the common mistakes that happen. Let’s say you go across state lines and it’s three years in your state and it’s two years in another and you just don’t have that common knowledge of that state. It seems simple. But when you are doing a huge caseload, that is a lot of what we see. That’s probably the most common. And hopefully, you know, when they people report things, when they become aware of it, they try to fix it down the road and they can, you know, appeal or get it back on the docket. But sometimes there is no, you know, there’s no solution other than the firms are paying for the underlying claim. Their insurance is paying for the underlying claim. That’s that.

Chris Dreyer

I would say probably these nationwide attorneys that are going, you know, multiple states, they have different laws and then the statutes are different.

Danny Hughes

Yeah, no. And the funny thing is it’s, if someone’s doing multiple states, that probably pretty good at it. It’s the people that don’t do multiple states that find themselves, you know, New York, New Jersey or whatever it is. They, it may be simple, common things. That’s different from state to state. But I think if you have a multi-state practice, you probably have. I see less mistakes then anyway, and this is what thing overall for law firms, it’s people that dabble, okay. If you are a hundred percent amazing at something and you go, I want to help my brother-in-law do his estate probate trust, or you know, even if you’re in general law, And you go to 1% of your practice that is really outside, but you are like a lawyer and you teach yourself that real estate transaction, or you’re a plaintiff attorney. It’s that one moment you step outside of your expertise because for whatever reason, business purposes or relationship purposes, dabbling is the, if you ask any insurance carrier they hate it. And one of the reasons why I’ve been able to sell them. The market, meaning 30 insurance carriers on the plaintiff’s spaces they’ve really come to enjoy their expertise. They hundred percent do something rather than a general practice farming, Columbus, Ohio, or, you know, you know, in de Moines or wherever it is that, you know, maybe businesses bad. And you’re picking up at a whole new area of practice that you didn’t even practice because you need to, the plaintiff firm really just drives forward. What it notes and that the market’s light when you are very good at one thing, just like a hundred percent patent lawyers are a hundred percent bankruptcy attorneys. You’re not going to make the common mistakes that someone who might be dabbling in your practice with yeah.

Chris Dreyer

The riches are in the niches. I see the exact same thing. I’d say out of all the clientele that we currently have on retainer, I would say only one or two are doing. Like what I would say, like cross areas of the law that don’t really align, you know, they’re doing PI, but then they do criminal fence or they do, you know, bankruptcy or something on the side, but most of them are just dead on exactly. In a complete agreement with you. They’re just doing PI.

Danny Hughes

Yeah. They know who they are and the market’s like that. And so when you’re rated and you fill out your area of practice every year, you’re rated on the last years, right? It’s a misunderstood thing. So it’s, you let’s say you do $10 million in revenue and it breaks down into an area of practice. You’re always being reflected on your last year from when that renewal is so all of Wisconsin comes up on July 1st. Most of Michigan comes up on August 18th. It’s like weird dates that I found out about when I got in the business. You know, for when, whenever the business started however long ago it did, but their anniversaries that come up all the time, I have, you know, 40, 50 renewals a month and. You know, it could be, and we refer to everything on the X Xscape. Are you on November 1st? Are you an 11 one? Are you at 12 one? Are you a one-one? And as a firm, you are rated on your past revenues. So I get a lot of calls that asks, Hey, we’re about to get into mass torts. And I say, that’s great. They’re like, what do carriers think about it? I’m like, I got a lot of hundred percent mastered firms who were good. I can tell you. But also, it’s not going to reflect until you start really making money. So it might be two years down the road before that hits your area of practice, reflecting the revenue that you get, because you’re not going to have revenue in a month from a tort that you just get in and correct. So that’s a big misunderstood thing that people do.

Chris Dreyer

You know, for some individuals listening and correct me if I’m wrong here, but malpractice insurance, isn’t a legal requirement for many states, but you’re paying these to protect your assets, to protect yourself. And it can also build confidence with your clients. You know, how could you know, for those saying, add on the malpractice insurance? I mean, are those just the small guys? Not thinking big, you know, everybody runs into it eventually.

Danny Hughes

Yeah. That’s a good, it’s a good question. And in some states it’s required that you disclose. I do not carry insurance on your retainer agreement, which to me, if I were running a business, I wouldn’t want to read that. Yeah. You know, it’s just like an it company that says I don’t carry cyber insurance. Like, okay. Your largest exposure is not covered right now. And I’m going to put all my I’m going to put my faith in you to represent me. And there’s no recrimination, you know what I mean? So most I’d say. I probably haven’t come across someone in a couple of years when I first started it, it was a little more common. The market was a little different. We’ve been in a soft market for 16, 17 years. And as I work with my brother, who’s in DNO, which is directors and officers and venture capital. They’ve been at a hard market for four years now. Do you know. At like 40, 50%, 75% increases. So if you’re paying a hundred grand, you could be paid 200 grand lawyers is not like that right now. But as my brother said, Danny, you’ve been flying around all over the country, giving people good news, just wait until you start handing bad news out. You’re everyone’s best friend right now. I have not lived through a hard market, which is a I think a good thing. But I also think in a hard market people, we shop in more, you know, there’s pluses and minuses to.

Chris Dreyer

At Thompson Flanagan, they have a saying you wouldn’t hire a real estate lawyer to file a patent. So why would you rely on a PNC broker to place your professional liability insurance? I asked Danny what the specific benefits of working with the specialist firm like Thompson Flanagan.

Danny Hughes

My biggest selling point I believe is Chicago. So every plaintiff attorney who’s listening to this right now had probably gets 50% or 25% of their checks out of Illinois because they’re all where the insurance companies are. New York and Illinois are literally 99.9% of the insurance market. There’s one out in San Francisco that are great friends of ours. But the deals are made. Just like old school. I mean, we go to rooftop parties with the Cubs games and you know, you, that relationship building within that market is very important. So a generalist who does the law firms, benefits are PNC and prime and everything there. It’s not the underwriter it’s they rely on a wholesaler. They don’t want to get rid of this policy because it’s a very good policy. Financially for a broker to have, but as a generalist, you are relying on someone else to be your expert. So, you know, lawyers can appreciate that. You refer a case out to somebody and you hope to God, they know what they’re doing. Well, a generalist does that. They go to a wholesaler who then goes into the market and a wholesaler. Who are they beholding to another mouth to feed? We are directly into the market. So a generalist who may be an amazing employee that. Broker has no clue about our market. They are all so different. It is not interchangeable and they don’t let people approach them. If you don’t have volume, if you don’t do it everyday. Cause they don’t want to deal with just, if they were open brokerage, they would deal with 10,000 brokers and they would never sleep at night and everything. So our biggest advantage and the deals I win the most are when a generalist broker relies on someone else. And I leave all the other stuff over there. This is too important to rely on a generalist.

Chris Dreyer

I’ve thought that about financial advisors too, right. They’re brokering all these different index funds and it’s like, okay. Okay. Where? So I kind of see a crossover relation there too. Let’s talk. Okay. So some of the attorneys listening are like, ah, I’m good. My insurance is good. How do we make this easy? What’s the process look like? Do you get their information? You eyeball it like what’s the process working with with you?

Danny Hughes

Well, it, you know, it took me a while to refine what I did. But the very first moment I started I found out people hate insurance. I think insurance and lawyers are like 18th and 19th on top 20. Like, you know, least liked people on the planet, right. You’re or like three and four, whatever we’re top of the list. So I have a healthy appreciation that people do not like insurance as buyers of that product. So I like to make it very easy. I request three documents. We have 300 plus plaintiff firms that we keep a very detailed track of every renewal. We say here’s 10 lawyers, Buffalo, New York. They carry $5 million worth of insurance with a $50,000 deductible. Here’s what they pay. Here’s their for attorney. Here’s their real area of practice. And I can break down a peer review. I could tell you if you are, if you’re in Nevada, if you’re in, I don’t care where you are. I could tell blind. How many lawyers, what you should be carrying and whatever, but we have the data to back it up as well. So we have, you know, 300 plaintiff firms. I, someone could send me three documents and it stays confidential. Nothing else happens with it. And I come back with a pure review that says, all right, you have a great deal. I can’t help you at all. And I usually get phone calls later from those people that have problems on a renewal or a claim, and they need a specialist, but I don’t want to waste their time or my time. And I’m not going to improve on something I know I can improve on. And you know, it’s not worth everyone’s time to upset the apple cart. I’m very honest with people about that. And with three documents, I tell people you have a great deal. There’s other times I get it and I, I’m not about selling more people, more insurance, but if you’ve been carrying a million dollars for the last 10 years, And you don’t understand that E discovery and defense costs and everything else is different 10 years later, right? I have a case in San Francisco right now, that’s at $5 million and we’re still two years away. Trial, the cost of defending everything is more expensive. So if you’re still carrying a million dollars or you’re still carrying 5 million or 10 million, and you were carrying that same amount 10 years ago, I would say, take a look at what you’re carrying at the potential costs of something. You want to defend yourself if there’s a defensible motion, a defensible case, and if you have a $5 million policy, you may pay 2.5 to defend it. You got to have something left to settle. If you don’t win. So you don’t want to go in your own pocket for the settlement. So anyway, I we’re, I’m very honest with people. If you have a great deal and great coverage I’ll tell you.

Chris Dreyer

And let’s talk about this and that makes sense. I totally appreciate the integrity aspect. That’s amazing on its own. Let’s talk about this. How do you tailor your approach depending upon the size of the firm? You said you had data and I also wanted to see if we could, if you’re not breaking any confidentiality, if you could maybe name some of those bigger firms that you’re working with, and basically, how do you tell your approach based upon maybe someone that’s a solo or small to kind of these larger firms?

Danny Hughes

You know, when I started people would break off, and one of the things I learned very quickly is there’s always break offs. You know, someone breaks off from a hundred percent from, and there’s one person that calls me, I would have 10,000 solos. So I really had, I then built up a community of people that can handle those, that. That I can refer to that I don’t have to deal with because I would not grow as many people would understand in their businesses. You’re not going to grow if you take every single case that comes in the door. But I also care enough about this space that I want people to be taken care of. I, you know, I’m hesitant to say who I do represent. You name a big firm in the state and the top five firms in each state. I guarantee you one of them’s a client, if not all of them I attacked it from a marketing standpoint. I got spending, I had a friend in the media and I found out how much people spent in each market. And as a entrepreneur, I just started calling people in Houston and San Antonio, wherever. If you were a top five spender in a market, I would call you. Cause I knew you had an inventory base. And you probably were one. Cause as you know, the plane affirm, you may not know how big they are that they, they, in a funny way, they could, you know, some of my biggest clients are two lawyers that want to carry huge limits because they are big refers. Right. You know, there’s no shape or size the same in the plaintiff’s space. And so, I will help most people, even if I can’t do it personally, but. I don’t treat anything differently. One of the things that’s happening now, if I could be more specific is everybody’s growing. Okay. I just went through two huge renewals. When I met most of my firms, there were six or seven lawyers. A lot of them are 50 60 now. So. The hardest thing. Sometimes the is growth. If you’re paying $3,000 in an attorney and you were six lawyers and now you’re 50 and I did nothing. If I broke her nothing, I would be handing you whatever I can calculate it out or what. Like you’d be paying this much now. I don’t like that. So I’m a fan of a year end of the market a year out of the market, because it’s like the boy who cried Wolf. If you go into the market every year and you’re kind of considered like, oh, here they are again. And everyone just starts and P it becomes less effective, but I make exceptions on claims and I make exceptions on growth. I just had I’ll give you an example of a huge firm that I just had the renewal. When I met them, they were paying. $14,000 in attorney for $10 million worth of coverage. Okay. Let’s say it was 30 lawyers this year. They’re going to buy 40 million for $5,100 an attorney. Okay. So not only did I win their deal and get them where they should have been for the 10 million that they bought. I’ve allowed them to grow or I’ve grown with them. Guess what? It’s more premium for me too, but if they were 14,000, an attorney and now are a hundred lawyers, they were 30. Now they’re paying 5,100 in attorney plus they’re carrying four times the limits. So I really, I it’s a physical game to me. Brokering is a physical act. If it was passive, we’d all buy it. I, when I train people, I tell that all the time, if it was a passive thing, we could be like progressive and go buy your car insurance online. So every single one of my friends is growing right now. It’s even if you’re, you were 45 lawyers and now you’re 77. That’s tremendous growth in the last two years. And so going out and finding alternative quotes to use as leverage against the renewal before they get their renewal numbers out is as important as. If they’re staying flat per attorney and they go from 15 attorneys to 50 attorneys and keeping that flat over a year, people do not want to pay more for insurance. I’m sorry. Does anybody, right?

Chris Dreyer

Right. And so you have these relationships and you have this experience. I mean, you said 16, 17 years of negotiating, you know, when they’re kind of, they’re not giving you their best deal.

Danny Hughes

And there are people that need leverage. Because insurance carriers aren’t out of the goodness of their hearts going to give you good ratings or good rates. Right? You have to force that in their hand. And I have, you know, I trained people. There’s 20 people on our team now. The first thing I say is the first moment you wake up and are comfortable with whatever’s being handed to you is the first day that someone like me is coming along out there. And I’ve lived by that because there were people that were comfortable in New York. You’re not going to hand out a 40% decrease because New York costs a lot of money to live, California, whatever I’ve taken the different tax. We’ve been around 17 years. There’s only been two years where the rate went up 1% or 2% over a 12 month period. We have been down, I would say on average 10% rate. So let’s say our books 2 million hours every year, it goes down 10%, but we’re growing 40% a year. So that means if you do right by. If you do right by brokering and you don’t sleep on your renewals and get comfortable with it, you’re going to, we’ve grown. So now we’re this massive book by doing right by people and that’s totally, and I said, the first moment I wake up and I become comfortable in this life. And act like, oh, that’s a great renewal or whatever is the first day I, you know, I’ll get out of the game.

Chris Dreyer

Chaffin Luhana has a phrase ‘doing good by doing right’. It just sticks with me, and…

Danny Hughes

That’s a good line. I say it out loud now. It’s not something I say every day, but I can tell you that my mentality is there’s someone like me out there. And the first day I become totally quiet in my regard of advocacy or whatever is the first day that someone like me comes and snatches it and says you’re asleep because when we see bad deals, the first thing… we can almost name the brokers because we know that they’re lazy or that we know that they’ve built in enough premium, like that’s wrong. Doug Thompson and Larkin Flanagan just really taught me. I learned from the best actually, and you know, they are relentless for their clients and it really bleeds down to everybody else. So I have some plaintiff firms that I really loved that the people there are, you could tell, they wake up every morning to fight for their people. I love that.

Chris Dreyer

That’s like a win, right? That’s a, that’s gotta feel good. That’s gotta feel good about helping your clients.

Danny Hughes

I love when we win and we deliver it, even though I’m talking about insurance and no one wants to go, I’ve been on the road since June. I was in south Florida this week. I was in the top of Florida last week. I was in Nashville and New York the week prior, just because we weren’t able to see people. And people spend a lot of money with us and I wanted to get out and see them again. But giving people good news. It’s just really the best. Like with what you do when it’s successful, when you run a campaign and people are honest with you that’s fun. You know, there’s nothing better.

Chris Dreyer

Yeah. That’s what gets you out of bed? It’s exciting. So for the plaintiff firms listening that want to get in touch with you and want to learn more about you know, if they’re getting a good deal, just more information. How can they get in touch with you?

Danny Hughes

It’s very simple. The last two applications in your expiring policy, last two applications. You complete an expiring policy and in about five minutes I can tell you if you have a great deal or not. And I will tell you if you don’t, we can cross that bridge as you come to it. But you know, I’d say 40% of the time we see very lopsided deals and that wakes me up every day. That’s a high percent. We have such a large book of plaintiff firms, but we probably only have 10 to 15% of the plaintiff market. So that tells me there’s that big of a universe out there that still paying too much for their insurance and that drives me nuts.

Chris Dreyer

The thing I really love about Danny is how much passion he has for helping plaintiff firms and how he focuses on getting the best deals on their malpractice insurance over everything else. It just makes so much sense. If you’re niching down in your own practice, you need insurance advisors that are specialists too. I’d like to thank Danny Hughes for sharing a story, and I hope you gained some valuable insights from the conversation. You’ve been listening to Personal Injury Mastermind. I’m Chris Dreyer. If you liked this episode, leave us a review. We love to hear from our listeners. I’ll catch you on next week’s PIMM with another incredible guest and all the strategies you need to take your personal injury practice to the next level.