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Payouts for legal malpractice claims are more common than ever

by | Jun 28, 2021 | Legal Malpractice |

If your attorney has committed legal malpractice, you may feel as if you have no recourse. However, you do have options. Last year, for instance, there was a record number of settlements for legal malpractice claims. And these payouts show no sign of decreasing – especially when it comes to multi-million dollar payouts.

High settlements – and lots of them

The Virginia-based insurance broker Ames & Gough conducted its 11th annual in-depth survey regarding legal malpractice insurance payouts. It surveyed 11 major insurance providers that, combined, offer professional liability insurance to approximately 80% of the American Lawyer 250 firms. According to the survey, in the period from the beginning of 2019 to mid-2020:

  • Nine of the participating insurance companies had paid a claim of more than $50 million
  • Two insurers had paid a claim between $150 million and $300 million
  • Four had paid a claim of more than $300 million
  • The frequency of claims decreased or stabilized
  • However, the frequency of multi-million dollar settlements increased

The practice areas with the most claims were trust and estate law, business transactions, and corporate and securities law. One of the most common elements of these lawsuits was poor communication.

What this means for claimants

Now that the economy is beginning to recover, the rate of legal malpractice lawsuits may continue to drop – or at least remain steady. The occurrence of multi-million dollar payouts, though, shows no sign of dropping. This benefits potential claimants in two major ways.

First, it signals to attorneys and their insurance providers that malpractice of any kind may prove exceedingly expensive. Lawyers will have to take extra precautions to ensure that they do not act negligently in any way with clients. Insurers will place extra pressure on their clients to avoid malpractice suits at all costs. Second, claimants may stand to recover damages in the hundreds of millions of dollars. Though these payouts remain rare, they are a testament to the extremely severe nature of legal malpractice and its very real, very costly damages.