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Malpractice Claims Up In 2012

According to a survey of seven major insurers that provide Lawyers' Professional Liability Insurance, disgruntled clients are slapping attorneys with more malpractice suits, seeking multimillion dollar claims over conflicts of interest and other alleged missteps. Five of the seven insurers said more law firm malpractice claims were filed in 2012 than in 2011. Six of the seven said they were seeing more claims that were expected to total more than $500,000, as well as a significant increase in claims in excess of $50 million.

In a development that may worry some law firm managers, the insurers said law firm mergers and lateral hiring - two of the most significant trends in the profession in recent years - have boosted malpractice claims. Many law firms have been seeking merger opportunities or hiring attorneys from other firms for a number of reasons, including:

  1. The imperative for survival
  2. The drive to expand the firm and develop new practice areas
  3. The desire to win business

However, along with the exciting potential opportunities growth brings, such initiatives represent elevated risks of malpractice claims involving divided loyalties (conflicts of interest) with respect to whom the firm can and should represent. Among survey participants, 5 of 7 insurers indicated experiencing an increase in malpractice claims as a result of mergers and lateral hires. All five insurers experiencing claim increases cited new, lateral-hired attorneys (who continue to work on clients of their former firms while employed at their new firm) as creating potential claim issues. Two insurers also indicated that new attorneys were not trained or supervised properly, and one insurer also traced issues to law firms not resolving potential conflicts of interest.

Real estate lawyers were the most-targeted practice, the survey found. Trusts and estates lawyers are also seeing an uptick in claims.

For more information on this survey, please see Lawyers Behaving Badly? Malpractice Claims Up In 2012 by Jennifer Smith, Wall Street Journal (June 17, 2013).


David Mills, HUB International PROFESSIONAL

HUB International PROFESSIONAL LAWYERS’ specialists are based in Vancouver and are focused on delivering the best coverage, best value and best service, with winning solutions for small, medium and large firms.

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