Real Estate Transactions Pose the Greatest Risk of Attorney Malpractice
According to a recent study, real estate transactions pose the most risk to attorneys of a malpractice claim. In its annual survey, the American Bar Association reported a higher percentage of professional liability claims stemming from real estate dealings than any other area. Over the past several years, plaintiff personal injury claims topped the list, but to the joy of the plaintiff’s bar and the chagrin of real estate professionals, that trend is apparently changing.
The top three types of activity leading to the majority of reported legal malpractice claims include (a) the preparation, filing, and transmittal of documents, (b) providing advice, and (c) the failure to file documents.
The rise in legal malpractice claims stemming from real estate dealings may not come as a surprise. Reportedly there has been an uptick in these claims since 2007. Suits generated from real estate, collection, and bankruptcy transactions have been the source of a larger percentage of claims activity of late. In all likelihood, failed real estate transactions caused by the drop in the market have led to more claims. A 2011 study conducted by Ames & Gough also supports the ABA’s conclusion and added that claims against all professionals are on the rise.
The silver lining here is that professionals now have a better idea of the types of claims they face. This information provides an opportunity to take preventive action and institute protective measures in the most vulnerable practice areas. Attorneys practicing in real estate and all real estate professionals should consider extra precaution when engaging in activity statistically more likely to lead to malpractice claims.