Over the past year, law firms and their insurance carriers have experienced a rise in the frequency and severity of high-exposure legal malpractice claims. Today, lawyers need to have a strong and proactive risk management plan in place to prepare for a potential claim.
Understanding how legal malpractice claims happen, where risk is the highest, and how claims can be prevented is a very valuable tool in a broker’s arsenal.
Most Common Types of Claims
Legal malpractice occurs when an attorney handles a case inappropriately due to negligence or with intent to harm and causes damages to a client. Below are five common types of malpractice claims against law firms today:
Negligence: Negligence claims arise when a law firm fails to exercise reasonable care and skill in representing a client. Examples can include errors in drafting legal documents, missing deadlines, or providing incorrect advice.
Conflict of interest: Conflict of interest claims arise when a law firm represents multiple clients with conflicting interests, resulting in a breach of fiduciary duty. Your law firm clients should establish robust conflict-checking procedures to identify and manage potential conflicts early on.
Failure to know or apply the law: This type of malpractice claim occurs when a law firm fails to have a reasonable understanding of the relevant laws or fails to apply them correctly to a client's case. Staying updated on legal developments and investing in continuous legal education can help mitigate this risk.
Breach of confidentiality: Law firms have a duty to protect their clients' confidential information. A breach of confidentiality claim can arise if a law firm discloses sensitive client information without authorization. Implementing strong data security measures and training employees on confidentiality protocols are essential steps in avoiding such claims.
Fee disputes: Fee disputes can occur when a client believes that a law firm charged an excessive or unreasonable fee. As a result, law firms should ensure that their fee arrangements are clear, reasonable, and well-communicated to clients. Providing detailed fee agreements and maintaining open communication throughout the engagement can help avoid fee-related malpractice claims.
What’s Covered, What’s Not
Malpractice insurance will cover the legal defense costs associated with malpractice lawsuits along with damages and settlements potentially awarded against your firm. On the flip side, legal malpractice will not cover areas of fraud, criminal activity, bodily injury, or fiduciary duties.
How to Avoid a Claim
To avoid malpractice claims, law firms should consider implementing the following best practices into their risk management program:
Maintain competence: It’s critical for your clients to stay current with legal developments and continuously enhance their knowledge and skills through professional development.
Clear communication: Lawyers must establish effective and transparent communication channels with their clients to manage expectations, keep them informed about the progress of their cases, and promptly address any issues or concerns.
Document management: Implementing a strong document management system to ensure accuracy and avoid errors in drafting legal documents is critical, particularly in the case of future claims.
Conflict checking: Develop and implement comprehensive conflict-checking procedures to identify and address potential conflicts of interest early on. This includes maintaining up-to-date records of clients and parties involved in each case.
Ethics and professionalism: By fostering a culture of ethics and professionalism within the law firm, your client will be able to promptly address any ethical concerns or violations.
Law firms should consult with legal professionals and follow applicable regulations and ethical guidelines to effectively minimize the risk of malpractice claims.
Why Vanguard Specialty
As a Managing General Agent with admitted and excess & surplus markets, Vanguard Specialty brings niche solutions to the insurance industry. Led by a former corporate attorney with more than 20 years of experience in professional liability insurance, Vanguard Specialty understands the unique risks and coverage requirements for today’s lawyers and small law firms, particularly when it comes to malpractice claims.
From staying current on underwriting and pricing trends with numerous A-rated insurers to matching your client with the best coverages and affordable rates, we are ready to customize the best malpractice claim coverage for you or your client.
Contact Chris Astorga, Program Manager at Vanguard Specialty at Chris.Astorga@vanguardspecialty.com or 813.999.8090.