The general public commonly believes that attorneys rarely get sued. By one estimate 1 in 20 private practice attorneys face a legal malpractice claim each year. Other estimates are that a private practice attorney can face 3 malpractice claims during their careers. So whatever the statistics attorney malpractice claims do happen and happen with frequency.
The current ABA study as in past studies state that 1 in 5 attorney malpractice claims are the result of calendaring issues. Errors can happen when calendaring at all firms, but good internal procedures and administrative review can help a firm, if not eliminate, stop almost all of these errors from occurring. Most insurance carriers view calendaring errors as preventable. Malpractice practice insurance carriers take a dim view of firms that have not taken steps to prevent these errors in the first place. Repeat offenders with calendaring issues can expect to find themselves with a non-admitted carrier paying many times more in malpractice insurance premiums than a firm that has never had a calendaring claim. The scary thing for a firm that has had a calendaring issue with poor administrative procedures, is are there more lurking that the firm just does not know about yet.
We are often asked which area of practice has the highest premium. No surprise is that the highest premiums paid are for firms that practice in the areas with the highest frequency of claims. Interestingly enough this has shifted throughout the years.
In the 2003 AGA study these were the top 5 vote malpractice claim vote getters:
1. Personal Injury—Plaintiff
2. Real Estate
3. Personal Injury—Defense
4. Family Law
5. Estate, Trust, and Probate
This held fairly steady until the Great Recession and the real estate and financial meltdown. Attorney Malpractice claims tend to be a following indicator of the economy. Until as recently as 2011 Personal Injury attorney malpractice claims were still number 1 with family law rising. But about 2012, the real estate meltdown caught up with the legal profession and attorney malpractice claims. Not surprising, Real Estate malpractice claims were number 1, followed by Personal Injury cases and Family Law. As the economy improved and the statute of limitations ran on many of the real estate claims, the mix of claims also changed.
With the aging population and the baby boomers now retiring, estate, trust and probate malpractice claims are rising rapidly. And if not number one currently, they soon will be. With estate, trust, and probate work attorneys can face claims not only from the parties involved in the drafting of the documents but also from a non-party, such as a disgruntled beneficiary, who may seek to blame the lawyer who drafted that will or trust for the assets of the estate being less than anticipated. These time bombs can come from many unexpected places many years after the initial work was done.
As goes the claims, so does the difficulty of obtaining Lawyers Professional Liability Insurance for certain practice areas. As the claims go up the number of insurance carriers willing to write certain areas of practice go down. Law firms can find themselves being non-renewed just because they practice the wrong type of law at the wrong time, even if they have never had a claim. It remains to be seen how the statute of limitation firewalls that states have erected lately will protect attorneys from these long tail claims.
L Squared Insurance Agency represents over 20 admitted insurance carriers. Not all of these carriers are right for a particular law firm. But for most claims free firms, we can obtain Legal Malpractice Insurance for the firm at a reasonable price.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080 |