Attorneys on the Move Leads to More Malpractice Claims

Legal malpractice claims are on the rise…again.  According to a recent study, lateral transitions by attorneys may be to blame.  Professionally Liability Matters previously discussed an uptick in malpractice claims, particularly those stemming from attorneys handling real estate matters.  However, a new survey released last week by Ames & Gough demonstrated an overall increase in legal malpractice claims and suggested that swapping firms is a main culprit.

Reportedly, the majority of major insurers surveyed reported an increase in malpractice claims in 2012.  Most stated that they saw more ½ million dollar claims and also a significant increase in claims that were in excess of $50 million.

What is the cause of such a drastic increase?  Economic downturn coupled with increased lateral movement and mergers, according to the report. Survey authors believe that the economic downturn has led to increased competition and a change in industry culture. Partners are now more willing to jump ship and firms are competing to hire profitable attorneys to keep up revenues.

This transition in the industry has opened the door for possible malpractice.  Reportedly, the stagnant market has caused firms to make lateral hires more quickly than in the past and the hurried hiring process leads to potential conflicts.  Additionally, the hiring firm is also at the mercy of the newly hired lawyer who might not be as thorough when it comes to taking stock of their current and past clients for the purposes of a conflict check.  All those surveyed indicated that lateral-hired attorneys who continued to work on clients of their former firms created potential claims and topped the list of the cause of the most malpractice errors.

This increased movement coupled with a struggling economy has created an environment ripe for malpractice.