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News Release: Most Lawyers Professional Liability Insurers Report Paying Multimillion Dollar Claims

by | May 23, 2023 | Important, law firms, News


WASHINGTON, DC, May 18, 2023 – Law firms throughout the U.S. continue to face
escalating malpractice risks as economic conditions, attorney migration and emerging
exposures trigger new lawsuits and social inflation drives up claim costs, according to a new
study by insurance broker Ames & Gough.

In its 13th annual survey of lawyers’ professional liability claims, Ames & Gough examined
the trend by polling 10 leading lawyers’ professional liability insurance companies that on a
combined basis provide insurance to approximately 80 percent of the Am Law 100 firms.

The survey traced rising claim costs to such factors as: higher legal defense costs due to social
inflation, aggressive tactics by plantiffs’ counsel, the swarm of new litigation on top of a
backlog of cases that arose during the COVID-19 pandemic, and the increasing complexity of
cases – especially those involving corporate transactions, tax, and immigration.

Even though legal malpractice claims frequency has stabilized during the past few years –
only two of the 10 insurers surveyed saw an increase in the number of claims last year while
six had no change from the prior year and two saw their claims frequency decrease – rising
claim severity continues to be a major challenge for law firms. This year, most insurers again
reported significant claims volume in 2022 with substantial reserves and large payouts.

Notably, seven of the 10 insurers surveyed had participated in a claim payout of more than
$50 million in the past two years; three paid a claim of more than $100 million; and two paid
claims between $150 million – $300 million.

For the third consecutive year, insurers surveyed saw the largest numbers of malpractice
claims related to three practice areas: Trust & Estate; Business Transactions, and Corporate &
Securities. In addition, insurers cited increasing cases arising from Insurance Defense and Tax
work/matters; they also expressed growing concerns about Immigration law.

“We’re seeing the largest generational transfer of wealth in history, so in terms of sheer
volume alone it’s not surprising that Trust & Estate has become a significant source of
lawsuits,” said Eileen Garczynski, senior vice president and partner, Ames & Gough. “Among
a lengthy list of best practices for managing potential exposures, law firms need to be diligent
in documenting their communication with clients, adhere to confidentiality requirements, and
make absolutely clear whom they’re representing in family matters and who is not their

With respect to other practice areas, insurers foresee a potential groundswell of litigation
surrounding immigration cases. Accordingly, law firms need to ensure they’re qualified to
handle these matters.

“Given rapidly changing laws and high stakes associated with immigration cases where an
error might result in deportation, law firms need to appreciate the complexity involved along
with the specialized knowledge required to handle these matters,” Garczynski warned. “In
their quest for growth, there’s a risk some law firms might try expanding into immigration
law without acquiring the requisite expertise, which could spell disaster.”

Among legal malpractice errors, conflicts of interest continues to be the most significant
cause of malpractice claims; eight of the 10 insurers surveyed ranked it the first or second
cause. Next is failure to know or properly apply the law, ranked either first or second by three

“Even though large numbers of conflicts arise from inappropriate handling of lateral hires,
certain practice areas such as Trust & Estate are seeing more of these suits,” Garczynski
noted. “In fact, there are no shortcuts for addressing conflicts; firms should be proactive in
their efforts to anticipate, avoid and manage potential conflicts, including implementing sound
procedures for recruiting, interviewing, engaging, and training lateral hires; flagging any
issues, and communicating effectively – both internally and with clients.”

Meanwhile, the cost of defending malpractice claims continues to increase. Among the 10
insurers surveyed, nine indicated defense costs increased in 2022 over the prior year. The
same number saw rates they pay defense counsel also increase during the past year.

When asked what issues were keeping them up at night, 80 percent listed the war for talent as
their top concern, followed by cyber risk, economic uncertainty, attorney well-being, and the
increased size of deals and transactions.

“If these insurer concerns aren’t a wake-up call for law firms, they should be,” said
Garczynski. “The good news is that most law firms have tools at the ready for anticipating
and managing their risks. It often comes down to maintaining a focus on risk management
that engages all the firm’s partners, associates, and staff; encompasses all areas of a firm’s
operations; and includes a careful assessment of their professional liability insurance

The insurers participating in the Ames & Gough survey were ARGO, AXA XL, BRIT, Crum
& Forster, Ironshore, Markel, QBE, Sompo, Swiss Re Corporate Solutions, and
Travelers. Copies of the survey – Malpractice Claims Unremitting as Law Firms Grapple
with Economic Woes, Social Inflation, and Attorney Migration – may be obtained free of
charge by emailing requests to: Those requesting the survey should include their name, title, affiliation, and phone number, and state “LPL Claims Survey 2023” in the subject line.