July 28, 2011 by Robert Tharp at 4:00:53 pm
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From fee disputes to allegations of negligent advice, lawyers are facing more malpractice claims from disgruntled former clients, according to a new survey of legal malpractice trends.
According to a 2011 Ames & Gough survey, a majority of the major legal malpractice insurance providers report an increase in malpractice claims. While claims are up as much as 20 percent, the survey also notes that large claims(with reserves over $500k) are also on the rise. There has also been an uptick in multi-million dollar claim payments – five of the six insurers surveyed were involved in paying a claim of $50 million or more.
Dallas attorney Nicole LeBoeuf, a partner at Shackelford Melton & McKinley who frequently defends lawyers in malpractice claims, says increased interest in legal malpractice is affected by a number of factors, including a sputtering economy. "In better economic times, people are more likely to move on than to place blame after a deal goes south," LeBoeuf says. "There's more at stake in a down economy and lawyers increasingly are finding themselves blamed when parties try to recoup losses."
Real estate, corporate & securities work, and trusts & estates cases account for the bulk of the legal malpractice claims. Meanwhile, conflict of interest is the single largest type of claim. The survey’s findings have been highlighted in the WSJ Law Blog and Insurance Journal.
“With more [real estate] transactions comes more closings and increased risk of errors,” the report states. “Further compounding this situation was the economic downturn that befan in the fall of 2008. As property values plummeted, more buyers and lenders began to look to the parties involved in these transactions to lay blame and seek to recoup their losses.”
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