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While the frequency of legal malpractice claims leveled off last year from 2019, there is growing concern among lawyers professional liability insurers there may be an increase in claims similar to past recessionary periods, says a survey issued Monday.
Nine of the 11 insurers surveyed by McLean, Virginia-based Ames & Gough in its annual survey saw claims frequency decrease or stay flat between 2019 and 2020, according to the survey, LPLI 2021 Claims Survey: Frequency of Legal Malpractice Claims Slows as Costs Continue to Spiral. The report reflects a survey of insurers accounting for about 80% of the top 250 law firms.
The report said this was a marked change from 2019, when 80% of insurers surveyed said claims frequency was level with or higher than in the prior year.
Despite this, however, the last two years were the worst on record for legal malpractice claims payouts, the report said, with anecdotally at least four claims that paid more than nine figures between 2019 and 2020, with almost $1 billion in total cost to insurers that write legal malpractice coverage.
The report said for the past several years, business transactions, trust and estates, and corporate and securities, were the practice areas experiencing the largest number of legal malpractice claims.
It said the most common legal malpractice errors were conflicts of interest; failure to file timely and date-related errors; and failure to know the law.
Legal malpractice insurers are seeing a host of “ominous” developments involving claims, most significantly an increase in claim severity, says a broker survey.