The recent recession contributed to a surge in legal malpractice claims. Feeling the pinch, financially strapped clients sought ways to recoup legal fees and litigation losses. The result was an uptick in claims against attorneys. Now that the economy has turned somewhat, one would expect to see a decline in legal malpractice claims. This is somewhat true according to a recent survey. While the overall number of claims has dropped, the severity of claims is on the rise. Also, the types of malpractice claims from 2013 may be telling of what the future holds for the malpractice community.
The recent survey conducted and issued earlier this month by insurance broker, Ames and Gough reveals that although legal malpractice insurers are reporting a drop in the number of LPL claims, they are also reporting an increase in malpractice claims with exposure in excess of $50 million. In the poll which surveyed eight professional liability companies, four of those insurers reported either paying or participating in paying claims of $100 million or greater. Further, two others reported paying a claim falling between $50 million and $100 million.
Real estate attorneys were the primary target, a field that continues to yield the highest amount of malpractice claims. Other susceptible groups include corporate and securities concentrations which generated more claims this year than the last. It is also noteworthy that conflict of interest remains the leading claim of malpractice. In fact six of the eight insurers surveyed cited conflicts of interest as the leading cause of claims.
Cyber and network security issues are also on the rise, according to the survey. Four of the eight insurers reported issues with claims arising from cyber breach due to a lost or stolen laptop.
The study provides insight on the risks facing professionals. While the volume of claims may have dissipated, the exposure has increased. Real estate professionals must be particularly careful while all professionals must maintain a proper conflict system. It is also clear from the survey that cyber-liability continues to pose risks to all. By tracking these types of claims in 2013, and learning from prior mistakes, the malpractice community may be in a better position to avoid and defend the next, inevitable claim.