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ABA Releases Study on Malpractice Claims
CHICAGO, Sept. 30, 2008 – Legal malpractice claims related to real estate are up approximately four percentage points according to the just-released American Bar Association study of legal malpractice claims for 2004-2007 compared to the previous study covering 2000-2003.
The ABA introduced its fifth study of malpractice insurance claims with its Profile of Legal Malpractice Claims: 2004-2007 during the Fall 2008 National Malpractice Conference in San Francisco earlier this month. The study and the conference are sponsored by the ABA Standing Committee on Lawyers’ Professional Liability.
As real estate values have fallen across the country, more individuals and businesses are suing their lawyers for bad results, according to panelists who discussed the findings of the 2004-2007 claims study during the conference’s opening plenary.
Panel moderator Katja Kunzke, president and CEO of Wisconsin Lawyers Mutual Insurance Company, said, “The frequency of claims goes up as the economy goes down.”
Panelist Brian Baney, assistant vice president of professional program claims for Zurich American Insurance Company, noted that most findings are consistent from one study of malpractice claims to another, with the exception of the real estate claims.
In preparing the claims study, the ABA invited all insurance companies providing malpractice coverage in the United States and Canada to participate. “This study, which covers the years 2004 through 2007, had the largest data sample and largest number of participants of any ABA claims study,” said Edith R. Matthai, chair of the ABA Standing Committee on Lawyers’ Professional Liability. “We had participation from 18 U.S. insurers and six from Canada.”
The study looks at malpractice claims in several different ways, examining such factors as claims by the size of the firm, by type of activity and by type of alleged errors.
According to panelists, claims resulting from alleged errors in real estate transactions range from conflicts of interest, closing errors or contract drafting, to zoning or escrow issues. In many states it is not uncommon for only one lawyer to be at the closing table, presenting a huge potential for conflict of interest.
Claims for failure to know and apply the law, failure to file documents, and errors in planning or procedural choices are several of the main reasons for alleged malpractice.
Panelists agreed that the key to avoiding malpractice claims in the first place is understanding and managing client expectations. In addition to Baney and Kunzke, panelists represented ALPS Corporation, CAN and Milliman, Inc.
The 2004-2007 study is the fifth in-depth look at malpractice claims by ABA Lawyers’ Professional Liability. Previous studies were done in 2003, 1999, 1995 and 1985. The study can be ordered through the ABA Web Store or by ordering at 800-285-2221, requesting product code 4140044.
With more than 407,000 members, the American Bar Association is the largest voluntary professional membership organization in the world. As the national voice of the legal profession, the ABA works to improve the administration of justice, promotes programs that assist lawyers and judges in their work, accredits law schools, provides continuing legal education, and works to build public understanding around the world of the importance of the rule of law.
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