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Are legal malpractice cases on the rise?

Returning to a briefly interrupted trend, it appears that legal malpractice cases did not go up in 2020. In fact, the number of malpractice claims in the U.S. may even have dropped. But that may have more to do with the pandemic than a reduction in alleged misconduct by attorneys.

A company recently surveyed the top 11 legal malpractice insurance carriers, which make up 80 percent of the market. Nine out of 11 reported that the frequency of their clients making claims on their legal malpractice policies either went down or stayed about the same last year. In 2019, 80 percent of the insurance companies surveyed said that claims stayed even or went up that year. That was the first time since 2013 that malpractice claims went up in the U.S.

A short-term drop?

But the insurance industry does not expect this reduction in malpractice litigation to last. All the companies surveyed reported having reserves of at least $500,000 in place for indemnity and legal costs related to at least one pending claim. Six of the insurance companies had at least 21 such reserves on hand. That is because they predict more people will sue their attorneys now that pandemic restrictions are lifting nationwide and the economy is recovering.

Also, while the total number of malpractice lawsuits might be down, many huge cases are out there. Nine of the 11 companies had paid more than $50 million to settle a single claim within the last two years. Two paid a claim of between $150 and $300 million, four paid claims above $300 million, and one claim settled for more than $400 million.