Amount of legal malpractice claims remains constant


In recent years malpractice claims have remained pretty constant according to a survey by risk and insurance advisor Ames & Gough. They found that although the malpractices remain constant the legal defense, the damages, and sums of settlements continue to rise.
Even though the frequency of legal malpractice claims remains constant over the years, the recent survey found that the number resembles the levels of the prerecession. The risk and insurance advisor Ames & Gough believe that this could reflect a “new normal.”

The data also showed that in 2016 in respect to damages, six out of nine insurers reported claims

in which they managed reserves exceeding $500,000. One insurer paid a claim that was over $100 million.
In respect to defense costs, the participating surveyed insurers reported an increase in defense costs. There were three factors the study identified as the main drivers, they were the complexity of the case, searching and procuring evidence to be used in case (e-discovery), and increases in defense rate.

At least a 2% increase in average rates paid to defense counsel as reported by most insurers in reference to defense rate increases.
The either first or second biggest cause for claims noted by the participating insurers was conflict. About half of the participating insurers who were surveyed cited the increase of conflict claims as a result of lateral hires. They noted several were a result of poorly managed resolutions to conflict of interest.
There has been a continued increase in cyber related malpractice claims. However, insurers reported that more cyber claims happened last year that in years before. Four of the insurers described hackers as the cause for most cyber events.

“A lawyer’s professional liability insurance policy may cover a firm for a malpractice claim by a client that arises from a breach relating to data,” global law firm Dentons said. “However, many law firms mistakenly believe their traditional malpractice policy will cover any number of cyber-related claims, even those that do not result in a traditional malpractice claim. This might not be the case.”


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