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NEW YORK — The state of the economy influences the type malpractice suits filed against professional firms, but errors and omissions insurers can expect claims regardless of economic factors, a panel of experts said Thursday.
Adam Marshall, an attorney with Kaufman, Dolowich & Voluck L.L.P. in Woodbury, New York, said that he sees a strong correlation between the nature of the economy and the nature of legal malpractice claims. He was speaking at the 21st annual Policyholder Advisor Conference held policyholder law firm Anderson Kill P.C. in New York.
“If the economy isn’t so great,” he said, “you see a lot of legal malpractice claims arise from real estate transactions, arise from matrimonial settlements, divorce actions. You also see a lot of personal injury based legal malpractice claims.”
But in a good economy, Mr. Marshall said, “you tend to see more legal malpractice actions arise from commercial disputes, business transactions, more kinds of cases where you get into issues of lost profit damages, lost consumers, lost customers, things of that nature.”
Kate Maybee, mid-Atlantic cyber and E&O product leader for Marsh L.L.C.’s FINPRO unit in Philadelphia, agreed that the economy has an effect of the lawsuit activity. She said difficulties can arise when clients take on too much work and rely on outsourcing and bring in independent contractors.
“That makes claims incredibly complicated,” she said, “when you’re trying to figure out who did what and who’s on the hook for what.”
Diana Shafter Gliedman, an Anderson Kill shareholder in New York, said several of her clients are concerned about covering the costs of government investigations. Over the past few years, she said, there’s been “a significantly sharp increase” in accounting firms and some law firms receiving subpoenas as a result of the investigations.
“Frankly,” Ms. Gliedman said, “whether the economy is good or whether is bad, I’ve observed that when a business deal goes south or litigation doesn’t go the way a client intended it to go, that could frequently lead to a lawsuit and that’s when our clients look to their E&O coverage.”