According to a recent article in the American Bar Association Journal, payouts for legal malpractice claims are at an all-time high, according to a new survey by insurance broker Ames & Gough. They surveyed 11 leading legal malpractice insurers about claims paid from 2019 to the middle of 2020, and found that Nine of the 11 insurers participated in a legal malpractice claim payout of more than $50 million, Two of the 11 insurers paid a claim between $150 million and $300 million, and Four of the 11 insurers paid a claim over $300 million. The largest number of claims stem from three practice areas: trusts and estates, business transactions, and corporate securities. https://www.abajournal.com/news/article/legal-malpractice-payouts-are-the-highest-on-record-insurance-broker-reports?fbclid=IwAR3zxZp-77HRr8p-OlqsNjm5gZIxIZ62_c-XQFYwRjh2QUHhE4MSKfsCQVE
• Four of the 11 insurers paid a claim over $300 million.
Although payouts surged, the number of claims stayed the same or decreased for nine of the 11 insurers.
The 11 insurers surveyed provide insurance to 80% of the top-grossing law firms in the United States.
The largest number of claims stem from three practice areas: trusts and estates, business transactions, and corporate securities.
Claims for trusts and estates work are increasing as the baby boomer generation ages, and court decisions allow third parties to sue law firms for work on behalf of a client, according to Ames & Gough.
Ames & Gough recommends using an engagement letter that spells out whom the firm represents and what services will be performed, documenting communications, ensuring that the client has testamentary capacity, and maintaining a familiarity with fast-changing statutes and tax laws.