Uptick in Lawyers’ Liability Claims; Business Transactions Top Claim: Study Shows
Law firms have seen an increase in the frequency of malpractice claims, which are becoming more costly to defend and could cause lasting reputational damage, according to a new study by insurance broker Ames & Gough. The study found that most legal malpractice insurers saw an increase in the frequency of new claims in 2015, including larger claims with costs in excess of $50 million.
In its sixth annual survey of lawyers’ professional liability claims, Ames & Gough examined the trend by polling nine lawyers’ professional liability insurance companies that on a combined basis provide insurance to more than 60 percent of the AM Law 100 firms.
Five of the insurers reported greater malpractice claim activity in 2015 compared to the prior year; four reported seeing a similar number of claims both years. Overall claim volume had been stable in 2013 and 2014, even as the number of larger claims continued to rise.
In the past two years, eight of the insurers surveyed participated in paying a claim of $50 million or more, including two that participated in a claim exceeding $100 million. Six of the nine insurers surveyed reported they had 21 or more claims with reserves of $500,000 or greater (combined indemnity and defense costs), the same number as in 2014.