February 22, 2013 - Oregon State Bar

2013 PLF BUDGET, AND 2013 PRIMARY ASSESSMENT PAGE 3
OCTOBER 6, 2012
The amount of money spent on outside counsel per claim has grown significantly in recent years. At
this point, the PLF spends more on claims expense than it does on indemnity payments. Because of
the increases in outside expense, we feel that it is appropriate to continue to expand the claims
department. The 2012 budget included a new claims attorney position with anticipated hire date of
April, 2012. For a variety of reasons, we did not fill that position. The reasons included the
supervisory workload connected to the replacement of retiring claims attorneys, the need to
consider whether changes in the supervisory and the support staff structure should be made with the
addition of a new claims attorney, and finally, the demands of directing the ongoing project of
moving the claims department to a paperless environment. We have added the new claims attorney
position back to the 2013 budget with an expected hire date of April 1, 2013. We have included an
additional claims secretary position with a similar expected hire date. Finally, the budget also has a
new paralegal position which would start on March 1, 2013.
While no definite plans have been made, several members of the PLF management team and some
claims attorneys are expected to retire in the next few years. We have increased the budget for
contingency to cover succession planning and possible expenses relating to replacing these
positions.
Allocation of Costs between the Excess and Primary Programs
In 1991, the PLF established an optional underwritten plan to provide excess coverage above the
existing mandatory plan. There is sepazate accounting for Excess Program assets, liabilities,
revenues and expenses. The Excess Program reimburses the Primary Program for services so that
the Primary Program does not subsidize the cost of the Excess Program. A portion of Primary
Program salary, benefits, and other operating costs are allocated to the Excess Program. These
allocations are reviewed and adjusted each year. The Excess Program also pays for some direct
costs, including printing and reinsurance travel.
Salary and benefit allocations are based on an annual review of the time PLF staff spends on Excess
Program activities. The current allocation includes percentages of salaries and benefits for
individuals specifically working on the Excess Program.
Besides specific individual allocations, fourteen percent of the costs of the claims attorneys and ten
percent of the costs of all loss prevention personnel are allocated to the Excess Program. The total
2013 allocation of salary, benefits and overhead is about 14.45 percent of total administrative
operating expense.
The 2012 Excess Program allocation was 15.15 percent. The 2013 allocation was reduced after
careful review of each staff member's work with the Excess Program.
Primary Program Revenue
Projected assessment revenue for 2012 is based upon the $3,500 basic assessment paid by an
estimated 7,034 attorneys. The budget for assessment revenue for 2013 is based upon a $3,500