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The law industry is one of the sectors that have been adversely affected by the recent economic downturn. Various US law firms have been under major business restructuring plans recently that include downsizing, lay offs, mergers, altering specialties in order to compete for new business and other cost cutting measures, all under the goal of survival. According to industry analysts, these changes can lead to increase in law firms malpractice claims.
Michele Wade, Executive VP of Lockton Cos., pointed out that trimming down employees and expenses may trigger lawyers to commit malpractice. “It leads to possibly having the same number of clients and a lot less number of people to help them. It also leads to a lot of law firms hiring independent contractors rather than full time lawyers. That often can lead to problems for law firms.” Wade also mentioned that the lawsuits against firms arising out of unpaid client fees can foster malpractices. “In this economy law firms are not getting paid. Their collections are way down and they tend to want to sue their clients for fees more aggressively than in a good economy. Suits for fees draw counterclaims and that brings professional liability claims. We didn’t like the way you did and we can’t pay you.’ It’s a vicious cycle.”
Kelley Heide Martin, senior claims specialist in the technical resource center of Scottsdale Insurance Co., added that the economic recession today pushes other malpractices. “The bad economy has led to inexperienced attorneys handling areas of law that they may not know well. That leads to additional errors and admissions claims.” Martin also noted that another potential E&O concern involves the use of social media and how its use might invite exposures. “It’s just not a good idea. It’s definitely an ethical violation. There needs to be some type of oversight by the firm or the attorney themselves. Talk about what you do in your own time. If you’re in mediation, and you say, ‘hey, they offered me X amount of money. I’m not going to take it because I’m going to get five times that,’ you’ve just blown through about five different ethical rules. That’s going to lead you to a malpractice claim.”
