Monday, July 11, 2005

ABA Reports Big-Ticket Malpractice Suits on the Rise


In a twist, attorneys, and corporate firms in particular, are finding themselves the targets of increasinly costly malpractice litigation. A June ABA study concluded that between 2000 - 2004, malpractice claims worth $2 million or more rose by 60% over the preceding four-year period. Accordingly, many experts in the legal field foresee sizeable increases in liability premiums across the board or even an outright unwillingness to write policies by some insurers.

According to the NLJ: "While the overall volume of cases is still small, the numbers point to a costly, long-term problem for law firms. If claims continue to rise, firms may face much higher malpractice insurance premiums, higher deductibles and insurance carriers that are less willing to provide coverage. In other words, they'll face a big hit to the bottom line."

Worse yet, some firms seem to be using malpractice as a marketing tool:
"Even a few corporate firms are getting into the act, launching malpractice suits against their competitors."

"The growing severity of claims stems in part from the major corporate scandals of the past five years, which, insurers and law firm managers say, have opened law firms up to new liabilities. But the fallout goes beyond some of the biggest headlines. In recent months, three major law firms-Sidley Austin Brown & Wood; Pepper Hamilton of Philadelphia; and Gunster, Yoakley & Stewart-have each been hit by suits with claims that top $100 million. All three firms declined to comment.Other firms have seen eight-figure jury verdicts. In February, a Texas court ordered Baker Botts of Houston, along with co-defendant Wells Fargo & Co., which served as executor of an estate, to pay $71 million to the trust of a widow for breach of fiduciary duty while planning her husband's estate. Last month, Seyfarth Shaw of Chicago was slapped by a Los Angeles jury with more than $35 million in claims and punitive damages for mishandling a lawsuit for one-time client and Tae Bo creator Billy Blanks. Both firms have said publicly that the claims are baseless, and they are appealing."

Are doctors that different from their legal counterparts? Is it time for the states to nip a burgeoning trial-lawyer business niche in the bud? If not, will we see courthouses empty, like physicians and emergency rooms in Nevada - void of attorneys fearing the "m" word?

Final quote: "When Bennett Wasserman began practicing law 30 years ago, the New Jersey attorney never imagined that he would make his career out of suing other lawyers. Legal malpractice was considered a backwater specialty frowned on by other lawyers. These days, though, suing lawyers is exactly what pays Wasserman's bills as he shuttles between trying cases for his Newark-based firm, Stryker, Tams & Dill, and teaching legal malpractice courses at Hofstra University School of Law in Hempstead, N.Y. "Firms are beginning to realize that there is good money in legal malpractice," Wasserman said. Lawyers, most often working on contingency, can rake in up to 40% of verdicts and settlements. As Wasserman sees it, the cases are a way to help self-police the legal profession. "It really is the consumer rights movement arriving at the doorstep of the legal profession," he said.

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