There’s always risk in business, especially anytime you hope to try something new or ambitious. This is why you perform your due diligence when you tackle a big endeavor, like a merger or acquisition. And it’s why you assemble an experienced team. A good team can lower your risk. At least, it should.
Unfortunately, life doesn’t always work the way it should. Many of these business deals go wrong, and in a growing number of them, people are turning and pointing their fingers at the attorneys involved. According to Insurance Business Magazine, insurers reported a two-year rise in claims tied to legal malpractice. Business transactions were the leading cause.
Businesses need attorneys who can stand up to the challenge
As Insurance Business noted, the recent spike in malpractice claims marks a sharp change from previous years. However, the prominence of claims related to business transactions does not. In fact, Insurance Journal explored the tie between business transactions and legal malpractice back in 2018.
At that time, the journal pointed out several reasons that attorneys came under fire after business transactions went bad:
- Many companies took advantage of the economic condition to move forward with mergers and acquisitions
- Businesses found their attorneys weren’t up to the complex demands of protecting their intellectual property, working with international laws or guiding their companies through mergers, acquisitions and initial public offerings
- Businesses have a lot at stake and want to recoup their losses after transactions go bad
- Attorneys frequently failed to research and disclose their possible conflicts of interest
This last point is particularly notable. Conflicts of interest were the leading complaint behind the legal malpractice claims insurance companies covered in 2019. Accordingly, you and your attorney want to do more than watch out for obvious conflicts. Conflicts aren’t always obvious. You want to conduct a thorough conflict check prior to getting started, and you want to remain on alert for conflicts throughout your work together.
When is it malpractice?
Just as it’s best to do the work to make sure your business deal succeeds, it’s best to find and work with an attorney who’s up to the task. However, business deals often change on factors no one can predict. And it’s not always possible to predict when an attorney may overlook a critical deadline, fail to consider the laws for all the relevant jurisdictions or compromise your case to gain favor with a competitor.
Even so, it’s important to remember that legal malpractice involves more than wrongdoing. It also demands proof that you would have reached a better outcome if not for your poor representation. Winning a legal malpractice case takes a specific kind of skill and experience, and you want to make sure you get the right attorney. Even if that just means, given how many insurance companies have settled their malpractice cases, that you get the best possible settlement.