Hat tip to Eileen Garczynski at Ames & Gough for providing a peek at the report highlighted in their recent news release: “U.S. Legal Malpractice Claims Unremitting as Law Firms Grapple With Economic Woes, Social Inflation, Attorney Migration” —

• “Law firms throughout the U.S. continue to face escalating malpractice risks as economic conditions, attorney migration and emerging exposures trigger new lawsuits and social inflation drives up claim costs, according to a new study by insurance broker Ames & Gough.”
• “In its 13th annual survey of lawyers’ professional liability claims, Ames & Gough examined the trend by polling 10 leading lawyers’ professional liability insurance companies that on a combined basis provide insurance to approximately 80 percent of the Am Law 100 firms.”
• “Notably, seven of the 10 insurers surveyed had participated in a claim payout of more than $50 million in the past two years; three paid a claim of more than $100 million; and two paid claims between $150 million – $300 million.”
• “For the third consecutive year, insurers surveyed saw the largest numbers of malpractice claims related to three practice areas: Trust & Estate; Business Transactions, and Corporate & Securities. In addition, insurers cited increasing cases arising from Insurance Defense and Tax work/matters; they also expressed growing concerns about Immigration law.”
• “‘We’re seeing the largest generational transfer of wealth in history, so in terms of sheer volume alone it’s not surprising that Trust & Estate has become a significant source of lawsuits,’ said Eileen Garczynski, senior vice president and partner, Ames & Gough. ‘Among a lengthy list of best practices for managing potential exposures, law firms need to be diligent in documenting their communication with clients, adhere to confidentiality requirements, and make absolutely clear whom they’re representing in family matters and who is not their client.'”

Details of how to get a copy of the complete report are shared in their summary.

With leave to snapshot a few details in contains, I’ll note some details of interest:

• “This year, 80 percent of the insurers surveyed, identified Trust & Estate as the leading practice area for legal malpractice claims. Trust & Estate continues to see a large percentage of legal malpractice claims, largely due to three factors:
  1. Trust & Estate work inherently involves personal and sensitive matters, making it uniquely susceptible to the potential for client dissatisfaction.
  2. The sheer volume of transactions given we are witnessing one of the largest transfers of wealth in U.S. history.
  3. Trust & Estate lawyers provide a broad range of client services, including estate planning, tax advice, and estate administration.”
• “There are also numerous risks affecting estate planning counsel, including ethical, financial, and litigation risks, as well as risks from non-client beneficiaries.”
• “The duty to avoid a conflict of interest. Estate planning attorneys often work with entire families, couples, domestic partners, and even business partners. Likewise, it is not at all unusual for a third party (a spouse, child, family member or family friend) to initiate contact with a trust & estate attorney on behalf of an elderly or disabled client.”
• “Failure to manage these conflicts can lead to accusations of favoritism, bias, or breaches of fiduciary duty. A firm needs to maintain rigorous conflict-checking procedures and ensure there is a strong disclosure in the engagement process with regard to who is the client; whom the firm will or will not be representing; and precisely what services will and will not be performed.”
• “Litigation and dispute risks: Disputes often arise between heirs or beneficiaries, and legal practitioners may have to defend their clients in litigation or mediation. These proceedings can be costly, and a loss in court can also lead to reputational damage for a legal practitioner.”

 

• “Conflict of Interest remains the most frequently cited malpractice error. Year over year, conflicts of interest is the most cited legal malpractice error. This year, eight of the 10 insurers polled placed conflicts as either the first or second leading cause of malpractice claims. “
• “Insurers are particularly concerned about firms that do not do appropriate conflicts checks because conflicts can create a real or perceived appearance of impropriety, and breach of the duty of loyalty
  to a client, thus damaging the reputation of the lawyer, the firm, and the legal profession overall.”
• “Conflicts of interest are of continued concern as law firms seize opportunities for growth either through lateral hires or mergers and acquisitions. Unfortunately, the potential for conflicts arising from these expansion initiatives are often
  not addressed early enough in the process.”
• “Furthermore, when conflicts are finally realized they are frequently overlooked or ignored. This underscores the importance of firms having systems in place to flag situations where conflicts may arise, establish protocols for avoiding them and appropriate procedures to investigate such circumstances.”