Experts say that legal malpractice claims are on the rise in 2011 due in large part to the recent economic crisis and the failing real estate market. Legal malpractice is the area of tort, or personal injury, law that addresses negligence or breach of fiduciary duty on the part of an attorney. The law holds attorneys to a high standard of ethical conduct because of the confidential and sensitive nature of the relationship between an attorney and client. The economic downturn and the housing market crash are largely to blame for the rise in malpractice claims according to some industry experts.
When the economy takes a turn for the worse, lawsuits tend to increase. The increase in litigation ultimately results in a corresponding increase in accusations of legal malpractice. Most attorneys carry legal malpractice insurance to protect them from claims. According to a recent survey conducted by Ames & Gough, which polled some of the top legal malpractice insurance companies across the nation, claims have risen across the board by six to ten percent. One insurer reported an increase of 20 percent during the first half of 2011.
Claims for malpractice can arise for a number of reasons; however, the survey cited “conflict of interest” and “failure to timely file” as the most common basis for claims filed to date. The rise in claims does not come as a surprise to many. As far back as 2009, many industry experts were predicting a rise in malpractice claims due to the economic crisis facing the nation. During a recession, or economic downturn, people are more likely to pursue any avenue available to recoup money lost as a result of failed investments or losses in the real estate market. Attorneys are often hired to handle the litigation which opens the door for a claim of malpractice when the litigation does not produce favorable results for the client.
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