A local RV dealer has advertised for years: “The kids are going to grow up, and the cost is going to go up” with regard to buying their RV right now. Much like the other certainties of life (death, taxes, and concrete cracking), claims against lawyers in the modern environment will happen. When you look at how some lawyers practice, you might say it is not only expected but perhaps even deserved. Even with responsible loss prevention conscious firms, however, it will still happen. Claims happen, as they say.
Responsible lawyers want to know where their claims come from and want to do everything reasonable to avoid them. Since its inception, my firm has been an owner in Attorneys’ Liability Assurance Society, Inc., or ALAS. Its business model and success has always been based upon preventing claims. If you have ever experienced a claim, you now know it is worth your time to prevent having another.
I regularly attend their annual training and their business review of operations and claims trends and history. Now serving 220 owner firms and insuring over 58,000 lawyers for over 35 years, they have the statistics. The usual suspects are that claims arise from conflicts of interest and “unworthy” clients, as in we never should represented those skunks. However, mistakes have become the leading cause of loss in the last few years.
Reported data from sources such as the ABA considerably lag the current year, and are not as reliable, in my opinion. Most reporting sources have noted for some time that the frequency of claims against lawyers has remained steady, but the severity has regularly increased. Little mistakes are causing big dollar losses in other words.
The ALAS viewpoint is that of larger law firms, as opposed to solos and smaller firms, but it is very relevant. The bigger firms have not seen rises in real estate matters like others, but have seen increases in claims arising out of trust and estate matters. Litigation claims seem on the rise to them also. The surprising statistic is that transactional claims have been 6 to 7 times more severe than litigation, but that is closing some.
All this means it is a dangerous landscape out there. You need to double down on your loss prevention efforts. You can cut your risk with multiple eyes on deals and computer assisted deadline management. Don’t just sit and wait to be a defendant. Do something today to avoid claims.
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