Attorney/Client » Popular “EPLI” Insurance Squeezing Out Smaller Employment Firms

Popular “EPLI” Insurance Squeezing Out Smaller Employment Firms

Businessman trapped inside box

January 31, 2018

The era of employment litigation arguably began in the 1990’s, with the passage of laws such as the Americans with Disabilities Act and the Civil Rights Act of 1991. Penalties for the losers in these cases can be substantial, and for a smaller company, a loss can sometimes be enough to put it out of business. Even a company that prevails, in some cases, can be at risk from the legal costs it has run up. This is the legal landscape that gave rise to a new product: Employment practices liability insurance (EPLI), which since its introduction as a free-standing product around the year 2000 has become increasingly popular, with a total “penetration rate” today of 39 percent of employers, according to the chief actuary of the Insurance Information Institute. The #MeToo movement, it’s noted, is likely to give that figure a bump. “The irony,” explains this article from Bloomberg BNA, “is that smaller law firms, whose bottom lines could benefit from the client pipeline that EPLI carriers could provide, actually may be losing business to larger law firms as the insurance companies become bigger players.” This post explains that dynamic, and how some boutique labor and employment firms are able to maintain a viable business despite the market headwinds.

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