There is no surprise in that statement other than the lawyers at Dentons got out ahead of me this year reporting on the annual survey of trailing 2014 claims submitted by insurance advisor Ames & Gough. As the early TV Los Angeles police character used to say on Dragnet: “All we want are the facts, ma’am.” They are what they are, and it is not good news for lawyers. Consistent with other surveys, the frequency of lawyer claims is about the same, but they are more costly.
The practice area of Trust and Estate Law topped the list for the largest source of claims. There are a lot of legal areas within that practice field and often the potential for client bickering and dissatisfaction occurs there, even over the dearly departed. For some years, real estate practices were the largest source of claims, but many more claims by trust and estate clients, and even in some areas non-client beneficiaries, have spiked it to the top. Real estate dropped to fourth after corporate business/securities, and business transactional claims.
As I have reported in the past, those pesky conflicts of interest claims show up as claims year after year. While many come from current or past client issues, claims from lateral lawyer hiring continue to rise. Like those presented by conflicts, many claims come from totally preventable areas such as mistakes of all types. When we have areas where we can control the potential for loss we should, but yet these types of claims soldier on each year.
For some years I have advocated that firms can reduce their exposure with a regular program of loss prevention. When it is always stressed as important in a firm, the mistakes, conflicts and other such preventable claims drop. In addition, good and regular communications help prevent claims. Surprises for clients often lead to unhappy clients and even claims. Good case evaluations and assessments with a discussion of the attendant risks help clients make proper business decisions. Budgeting and reserve settings are part of business organizations with regard to litigation these days. They are important to be timely and quickly updated when things change. Unhappy clients also happen around larger than budgeted bills, some even leading to fee disputes. So, when costs are going up, you best be communicating all to the client. A review of disciplinary complaints filed last year in just one surveyed state showed the biggest complaint area was the “Failure to Communicate”, followed by “Lack of Diligence”. That makes a case for communication.
There are many common sense and logical ways to prevent claims. Good procedures and good communication are at the heart of any program. Yet busy lawyers still misstep year after year. I submit that you can make money for your firm by having someone therein designated as the quality control lawyer. Pilots immediately read back the controller’s flight information for a reason. — The loss from a failure to communicate properly could be their own.