Do you know if your attorney has legal malpractice insurance? Hopefully, it’s not an issue. You would much rather see your attorney succeed than sue him or her down the road. However, the insurance is more of an issue in some practice areas than in others.
According to a recent industry report, the overall number of claims stabilized in recent years. Still, the total cost of claims grew significantly, and four practice areas stood out as the highest risks for legal malpractice.
Economic pressures take their toll
Compiled by the insurance brokerage firm Ames & Gough, the report didn’t cover all legal malpractice cases but addressed the cases that involved several large insurance companies. Together, those companies backed roughly 80% of the nation’s largest 200 law firms, but the data may not accurately reflect the types of cases filed against smaller firms.
Nonetheless, the insurance companies reported that the four types of law most prone to legal malpractice were:
- Business transactions
- Corporate securities
- Commercial real estate
- Trusts and estate planning
In other words, people who worked with attorneys on legal matters focused primarily on money were more likely to pursue recompense when those matters turned sour.
Ames & Gough suggested the results owed to the fact the U.S. economy was growing when people filed these cases. That growth led to increased demand on law firms to help with mergers, acquisitions and other types of sophisticated business concerns. When firms didn’t leave themselves adequate time to do their work, they could make clerical errors, provide substandard representation and breach their fiduciary duties.
Do smaller firms make big firm mistakes?
It’s hard to say how closely the report’s patterns hold true at a smaller scale. Smaller businesses may not hire one of the largest law firms and may not, therefore, find their way into the Ames & Gough reporting. Similarly, smaller firms may not make the same mistakes as larger ones, such as hiring attorneys who bring conflicts of interest with them to ongoing cases.
Nonetheless, the report helps in other ways. It identifies the legal practices at highest risk for malpractice, and it identifies the most common complaints. Those two pieces of information can then inform your search for legal representation. And they might let you know when to check if your attorney has legal malpractice insurance.