According to a recent study, law firms have seen more malpractice and professional liability claims against them so far in 2011 than they had in previous years, which is likely a result of the recent economic recession and the slow recovery of the economy.
Ames & Gough, an insurance broker, released the results of their most recent study which found that professional liability claims made against lawyers have risen, leading insurance companies to provide as much as 20 percent more coverage in 2011 for the exposure.
The study looked into this trend by surveying six large insurance companies that together work with nearly three quarters of mid- and large-sized American law firms. Among the participating insurance companies, three stated that their claims had risen between 6 and 10 percent in 2011, and another stated that there had been a rise of between 11 and 20 percent. The remaining two participants in the study said that the claim levels remained approximately the same.
Ames & Gough vice president, Eileen Garczynski, explained that as the clients of law firms witness the decline of their financial situation, they are increasingly likely to try to obtain compensation from their legal advisers. She went on to say that if these lawyers are not cautious within their first representation, then “they may well become targets for a malpractice claim when the client’s financials spiral downward.”
The survey participants also noted that the field creating the majority of the rise in new claims was real estate, with corporate & securities work in second place, followed by trust & estates.