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Subject to the conditions described therein, your DEDUCTIBLE obligation may be subject to one of the following: 3.1 In the event a claim is fully and finally resolved to the satisfaction of all parties, including us, as a result of alternative dispute resolution in a form acceptable to us, without resorting to litigation, we will waive your DEDUCTIBLE obligation for such claim. 3.2 If within one year of being reported, or being deemed to have been made, in accordance with CONDITIONS 6.3 of this policy, a claim is fully and finally resolved to the satisfaction of all parties, including us, and all loss and defense costs arising from such claim have been paid, your DEDUCTIBLE obligation for such claim shall be reduced by 25% up to a maximum reduction of $25,000. 3.3 If a claim arises from an assignment in which you used an engagement letter containing a limitation of liability clause and mediation clauses in a form approved by us that was signed prior to the covered act being committed, your DEDUCTIBLE obligation for such claim shall be reduced by 50% up to a maximum reduction of $10,000 each claim, and $25,000 in the aggregate for the policy period. 3.4 If we recommend a settlement within the applicable LIMIT OF LIABILITY which is acceptable to the claimant, and you or your designee consent to such settlement within 45 days of our recommendation or within the time permitted by the claimant to accept the claimant's demand, whichever is less, then your DEDUCTIBLE obligation for such claim shall be reduced by 25% up to a maximum reduction of $25,000. We will reimburse you for the difference between the DEDUCTIBLE amount previously paid in connection with the claim and the amount of the reduced DEDUCTIBLE. If, however, you or your designee does not consent to the settlement of the claim within the time frame described above, the DEDUCTIBLE will remain at the amount set forth in Item 4 of the Declarations, even if consent is given to a subsequent settlement of such claim. Furthermore, in the event you or your designee does not consent to the settlement within the time frame described above, our liability for the claim will not exceed the amount for which we could have settled the claim plus defense costs incurred up to the date of the refusal to settle, subject to the LIMIT OF LIABILITY. We will have the right but not the obligation to continue the defense of the claim after the date of the refusal to settle and may in such a case, at any time after the date of the refusal to settle, deposit in escrow, subject to the applicable LIMIT OF LIABILITY, an amount equal to the proposed settlement amount less any defense costs incurred after the date of the refusal to settle and may withdraw from the further defense of the claim by tendering control of the defense to you. The maximum amount of the reduction in your DEDUCTIBLE obligation in respect to 3.1, 3.2, 3.3 or 3,4 above shall be $50,000 for the policy period. 4. DEFINITIONS Whenever used in this policy: 4.1 Alternative dispute resolution means the use of arbitration or non-binding mediation in a form approved by us in which a neutral panel or individual assists the parties in reaching their own settlement. 4.2 Application means all applications, supplements, written statements and other materials furnished to us, by you or through your agent, to procure lawyers' professional liability insurance and are part of this policy as if physically attached. 4.3 Claim means: a. a written or verbal demand for money or services; b. a written or verbal demand to toll or waive a statute of limitations; c. ajudicial civil proceeding; d. a disciplinary proceeding including but not limited to a demand, grievance, or allegation involving a covered act made against you to any professional association or society charged with the responsibility to oversee professional disciplinary matters, whether or not such demand, grievance, or LPLPOL01 [10/10] Page 5 of 14 Protective Insurance Company