You know the legal rules and you follow them. You use common sense and have good social skills with clients. You still get named in a legal malpractice action. It can and does happen to good lawyers. The ABA recently put the average number of claims at three per career and at a risk of 4% to 17% of a claim in any year. ABA Profile of Legal Malpractice Claims: 2008-2011.
Like other professions, you cannot guarantee a result (and remember that half of each case loses as a rule) and sometimes an adverse result ends up as a claim despite no errors or issues – just a loss. I again encourage you to use all the methods available to you to control and reduce those possibilities. Bring your own stats down by all means available.
Various groups look at trailing years and report the highest risk area of practice. It just makes you want to stay in bed some mornings. The latest areas to stub toes are real estate (20%); personal injury (15%); family law (12%); estate, trust and probate (10%); and collection and bankruptcy (9%). Oddly, solos have the highest percent of the claims and the percents drop sharply as the firm size goes up. The level of experience fools you also because the new and the old are not the leaders of the pack in claims. Instead the biggest tranche of claims (35%) falls with those having 11 to 20 years of experience.
The number of claims and the severity (read cost) are on the rise. While loss prevention is not a positive cash flow in a firm, it certainly prevents already made and taxed income from going out the door. It is truly worth the time of a firm to devote resources to a solid loss prevention program.
Ames & Gough, a risk and insurance advisor to the law firms, does its own analysis and studies trends. They polled seven of the leading professional liability insurers (80% of the market for Am Law 250 firms). They confirm that the number of claims is increasing along with their frequency. The bad news is that their study confirms the big claims and costs are growing, no doubt due to added complexity and the cost of defense of these claims. Out of the seven carriers, six reported payouts on claims of more than $50 million. That makes a law firm stop to look at their purchased limits, compared with the type of work they do.
The Butcher’s Bill lists new risks that never even existed in the past (attorney/client relationships from e-mails; inadvertent disclosures via e-mail; cyber risks and confidential information breaches). Lateral hires are driving up the claims, but the old standby of conflict of interest still ranks as the first or second on all lists of the most frequent cause of malpractice claims – by a large margin.
I would like to offer end-of-the-year cheerful thoughts. But the old Dragnet TV show detectives said: “Just the facts, ma’am.” It is what it is, so you better do all you can to keep down the claims against you.
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