The Risk Manager, Spring 1997
- Settlement/Negotiation claims increased in ‘96 to 11.4% from 8.1% in ‘86.
Comment: We see settlement/negotiations as a growing risk in Kentucky because of increased client settlement remorse, numerous successful claims in other jurisdictions, and an overall quicker trigger on malpractice claims against lawyers.
- Failure to Calendar Properly claims decreased in ‘96 to 6.8% from 11.5%; but Procrastination in Performance/Follow Up claims increased to 8.7% from 5% in ‘86.
Comment: It appears that more firms are automating their work and docket control systems which improves sensitivity to time limits; but if you drop the ball after getting it in play, you haven’t accomplished much.
- Conflict of Interest claims rose slightly. This warrants concern because conflict claims with little merit or connection to an alleged loss are often given great weight by juries.
Comment: Our sense of it is that too many Kentucky lawyers are relying on memory and Rolodex for conflict review and are not installing automated systems readily and inexpensively available.
- Debt Collection claims have significantly increased as a result of the Federal Fair Debt Collection Practices Act.
Comment: Kentucky lawyers are having their share of problems with this law -- it’s important to know what you are doing or expect to pay about $5,000 for a hard lesson.
- Non-client claims continue to increase with many coming from family law and divorce matters.
Comment: This is major risk in business transactions and real estate matters as well.
- Claims involving lawyer business transactions with clients are apparently in decline.
New Lawyers and Solo Practitioners: As the lawyer employment market tightens more new lawyers are going into practice as solo practitioners. Some insurers are concerned that without supervision and mentoring these lawyers are exposed to extraordinary risk.
Comment: This appears to be Kentucky’s experience.
- The affirmative defense of the malpractice statute of limitations is less effective in defending claims.
Comment: This is particularly true in Kentucky. There have been a series of Supreme Court cases in the ‘90’s that effectively increase the time available to file a legal malpractice claim.
- There is a correlation between how well the economy is doing and the number of legal malpractice claims. There are fewer in good times and more in hard times.
- Overall insurers experienced only modest and incremental increases in the number of claims and their value over the last ten years. The surge in legal malpractice claims appears to be diminishing.
Comment: We think the Kentucky situation is stable and expect this trend to persist. We, however, do not see a decrease in frequency of legal malpractice claims. The wave of the future is the splash of now.