Posted on: October 18, 2018 by Huntersure LLC.
In a study of the latest data related to legal malpractice, numbers show that new claims may be stabilizing, but remain well above historical experience. The study, according to Law.com, looked at how claims leveled off in 2016 as the cost to defend attorney malpractice insurance claims continued to escalate.
The study highlighted nine liability insurance companies and detailed how they all had claims with reserves over $500,000. And in the past two years, six of the insurers have participated in paying a claim of $50 million or more, including one with a claim exceeding $100 million. This shows that having malpractice insurance in place is not only beneficial, but a necessity for legal firms. Let’s dive into the data more thoroughly.
The reason why these claims have not only been consistent, but also downright expensive, is due to conflicts of interest. Conflicts are bringing more claims to a head as every year the survey is conducted, insurers have noted conflicts as the most common alleged malpractice error in the legal field.
Mergers, acquisitions and lateral hiring are all lending a hand in keeping malpractice claims up. The more they take place, the more firms run the risk of increased conflicts. The study pointed out that the attitude toward conflicts of interest during mergers and moves is one of not taking things too seriously, which opens the possibility of more legal issues.
Nearly half of the insurers who were surveyed noted an increase in claims from lateral hiring moves. From not being trained properly to conflicts not being closed out before a merger, law firms continue to run the risk of having malpractice claims brought against them. This shows that it’s even more imperative for law firms to be diligent in their hiring and onboarding, and be extra cautious in bringing on an attorney whose conflicts outweigh the benefit of having them on staff.
The survey noted that law firms should consider only hiring lateral attorneys known to one or more of the firm’s partners so there’s built-in vouching pointing to a candidate’s experience and transparency.
Cyber attacks and data breaches are making their way into every industry and every office, and potentially every home. With more refined ways for hackers to infiltrate the networks of companies, including law firms, the number of cyber claims showed strength in the data.
Five of the nine insurers surveyed showed more cyber-related legal malpractice claims in the past year than in previous years. Most of the claims involved hackers who took sophisticated steps to work their way into the files that law firms held.
Law firms need to display a sense of urgency surrounding protecting not only their information as a company, but the sensitive data of their clients. Showing negligence in this area will only lead to serious claims. Cyber liability policies can be tailor-fit to meet the needs of law firms looking to keep everything safe as well as knowing what to do following an attack.
Huntersure LLC is a full-service Managing General Agency that has provided insurance program administration for professional liability products to our partners across the United States since 2007. We specialize in providing insurance solutions for businesses of all sizes. Our program features can cover small firms (grossing $2.5 million annually) to large corporations (grossing $25 million annually or more). We make doing business with us easy with our breadth and depth of knowledge of E&O insurance, our proprietary underwriting system that allows for responsive quoting, binding and policy issuance and tailored products to meet the needs of your insureds. Give us a call at (646) 751-3030 to learn more.