Legal malpractice lawsuits can be costly for any law firm, but the potential cost of malpractice claims can vary significantly based upon the areas of law concerned. Some areas have a high frequency of lawsuits filed, while others have more severe costs of defense and settlement. Knowing where your area of practice stands in this regard is important when looking for suitable legal malpractice insurance. Analyzing recent trends in malpractice claims is one way we help Oklahoma attorneys secure their practices against future financial risks.
Many of the practice areas that experience the highest frequency of malpractice suits are the same ones that small firms tend to practice in. The question for most small firms that specialize in these high-frequency areas is not if they will face a malpractice lawsuit, but when. Without professional liability insurance, the cumulative costs of many low-severity suits may be too high to bear.
Areas of Practice With the Highest Frequency
1. Personal Injury and Property Damage – Plaintiff
If you represent plaintiffs in this area of practice, you may be comforted to know that malpractice lawsuits originating from clients in the personal injury and property damage area are generally not as costly to resolve as others. However, you also need to be aware that the number of lawsuits filed against attorneys in this area has historically been the highest. Nearly 30% of our claims over the past decade have been filed by lawyers in this AOP. If you represent clients in this AOP, your need for professional liability insurance is among the highest in the industry.
2. Collections and Bankruptcy
About 14% of our legal malpractice claims have originated from collection and bankruptcy cases. The costs of defending and settling suits in this area are usually relatively low, but these costs can vary widely – from next to nothing up to millions of dollars – based upon the value and complexity of the underlying case. Consider this when determining the appropriate level of insurance coverage for your practice.
3. Real Estate
Professional liability lawsuits against lawyers practicing in the area of real estate law have been rising recently. Some of the leading issues in real estate that lead to malpractice suits include errors in preparing a deed or mortgage; errors on financing documents; lease or loan guarantee language that doesn’t properly protect the client’s interests; errors and omissions in closings and errors involving escrow funds.
4. Estate, Trust and Probate
Claims originating from this area of practice have recently been on the rise and are predicted to continue increasing as the Baby Boomer generation transfers wealth at a record pace in the coming years. Because these cases are usually highly sensitive and often involve several parties, they carry a relatively high risk of client dissatisfaction. In this area of practice it is possible that lawsuits can come from multiple sources since it is one of the rare areas of law where an attorney client relationship is not necessary to bring a suit. Firms that handle this area of law are susceptible to multiple lawsuits at one time.
5. Family Law
Even though the average cost of resolving malpractice claims for lawyers practicing in the area of family law is relatively low, the frequency of claims has been increasing in recent years. When practicing family law, attorneys are always facing the reality that client emotions run high and resolutions, even when they are reasonably favorable for the client, may be perceived as inadequate due to those emotions. Many claims in this area also result from failure to uncover hidden financial information or retain experts to place proper valuation on business holdings and assets in divorce proceedings.
6. Business Transaction / Commercial Law
Our favorable economy has created a boom in business opportunities over the past several years. While businesses have been busy acquiring one another, merging and starting up, attorneys in the area of commercial law have seen their own businesses thrive. But with this increase in opportunity has come an increase in legal malpractice lawsuits when deals fall through, businesses fail or problems arise. Impacted businesses may look to malpractice suits to help them recover financially whether the claim is warranted or not.
Make Sure You’re Adequately Protected
If you are practicing in any of these areas of law that experience a high frequency of malpractice claims, you’ll want to consider this when choosing your professional liability insurance provider and plan. Oklahoma Attorneys Mutual Insurance Company is the only insurer endorsed by the Oklahoma Bar Association and we use in-state experts to defend you in courts they are familiar with. You can rest assured that OAMIC has you covered so you can concentrate on taking care of business even when navigating these high claim frequency areas of law.