This article is from Business Insurance Magazine and can be found here
Posted On: Jul. 06, 2011 2:32 PM CENTRAL
By: Judy Greenwald
Law firms face a rising number of professional liability claims, largely because of the effects of the recession and the ongoing real estate market slump, according to a survey released Wednesday.
The insurer survey by McLean, Va.-based broker Ames & Gough, which was conducted in the spring, included six insurers that represent almost 75% of midsize to large law firms in the United States.
More likely to seek redress
“As law firms’ clients continue to encounter financial difficulties, and the impact on their business becomes more pronounced, they are more inclined to seek redress from their advisers,” according to the survey. “In this regard, if the lawyers representing a client are not careful during the initial representation, they might well
become targets for a malpractice claim as the client’s financial situation worsens.”
Other trends that the survey found include:
• The largest number of claims occur in three practice areas: real estate, corporate and securities, and trusts and estates.
• Large claims with a reserve of more than $500,000 are increasing, with half of survey participants stating that there has been an 11% to 20% increase in claims with such reserves.
• Most insurers are seeing claims payouts of $50 million or more.
• Conflict of interest was the largest cause of malpractice claims.
• Four of the six insurers included in the survey have developed a panel of qualified attorneys around the country to handle claims.
Insurers who participated in the survey were units of Pembroke, Bermuda-based AXIS Capital Holdings Ltd.; London-based Beazley Group P.L.C.; Chicago-based CNA Financial Corp.; Connecticut-based Hartford Financial Services Group Inc.; Lexington Insurance Co., a unit of New York-based Chartis Inc.; and Chicago-based Berkley Select, a unit of W.R. Berkley Corp.
The survey, “Lawyers’ Professional Liability Claims Trends: 2011,” can be obtained for free by emailing a request to firstname.lastname@example.org. Those requesting the survey should include their name, title, affiliation, phone number and put “LPL Claims Survey” in the subject line.