Hacking, a proliferation in so-called “lateral hiring,” complex business transactions, confusion and disagreement surrounding estate administration matters — these and a few additional matters spell significant concerns for insurance companies in Colorado and nationally that provide risk coverage for attorneys and law firms through legal malpractice policies.
Judging from the results of a recently concluded study authored by a major insurance broker, insurers who operate in this somewhat specialized area have a lot of concerns, coupled with an appreciable outflow of money required to address them when adverse legal decisions target their clients.
Here are a just a few topical areas that yield undue stress for legal malpractice insurers these days, according to research culled by broker Ames & Gough:
- Litigation commenced by irate or otherwise aggrieved law firm clients that remains at a relatively high rate when considered over a long-term horizon
- A related “claim severity” rate that concerns insurers across the country for the escalating dollar amount of claim awards
- Law firm clients’ failure in many instances to do requisite due diligence in screening new hires in order to minimize future conflict-of-interest concerns
- Spiked costs expended in claim defense
Although these are all valid concerns in any year, of course, surveyed insurers state that last year was especially problematic. Every one of nine survey respondents pointed to claim payments of at least $500,000 in 2016, with a majority of them paying out at least that amount in more than a score of litigated matters.
And one respondent paid out more than $100 million in a claim last year.