Though it was once quite rare for a large law firm to face a lawsuit of its own, the frequency of claims being aimed directly at lawyers is rapidly increasing, and the firms are now boosting their insurance coverage to help to protect themselves against costly liability claims.
According to legal experts, suing lawyers and their firms got started in the 1980s. This was also especially the case among the law firms that represented collapsed financial institutions in the Savings & Loan crisis, who were targets for FDIC litigation.
Today, one of the primary types of claim being seen are for malpractice. According to legal and insurance experts, this trend has a great deal to do with the struggling economy. As failing businesses fall apart, bankruptcy trusties work to try to recover as much cash as they can from the legal advisors of those businesses.
Some lawyers are also reporting that their clients are using litigation threats to help to keep their legal bills down.
In response, firms are now purchasing greater amounts of insurance coverage, and are broadening the policies that they are buying in order to protect themselves with employee and management insurance, a new behavior in that sector.
According to the president of the specialty insurance brokerage, Ames & Gough Insurance and Risk Management, Dan Knise, “We are seeing firms buying higher limits of insurance, and there are some buying up to $400 million or more.”
Knise explained that the larger the amount of money there is at stake in a certain lawsuit, case, deal, or potential patent, the greater the vulnerability of the lawyers and their firms when they represent those clients and things turn to the worse.