The American Bar Association’s Standing Committee on Lawyers’ Professional Responsibility recently published an update to its Profile of Legal Malpractice Claims study. The update provides data on professional liability claims from 2020-2023, based on shared data from professional liability insurers.
It is important to note that big law is generally not represented in this report. Eileen Garczynski at EPIC Law Firm Group conducted a separate study, polling 11 professional liability insurers that combined provide coverage to more than 80% of AM Law 100 and NLJ 250 firms. Additionally, Doug Richmond and Andrew Ricke compiled information from two leading insurers of large and mid-size firms and reported the data anonymously June 2025 in the “Lockton Report.”
Practice Area Risk Trends
According to the 2020-2023 ABA Study, the riskiest practice areas experiencing the highest number of claims are (1) estate, trust, and probate; (2) real estate; (3) personal injury – plaintiff; (4) family law; (5) collections and bankruptcy; (6) business transaction commercial law; (7) patent, trademark, and copyright; (8) corporate/business organization; (9) labor law; and (10) criminal law.
For context, estate, trust, and probate increased in risk from its previous fourth-place ranking to now atop the leaderboard. This shift in frequency, according to the report, is attributed to the aging population and the highest transfer of wealth comparatively to any other time in the United States. Likewise, labor law and patent, trademark, and copyright claims increased by approximately 2.6%.
Conversely, criminal lawyers experienced a decrease in claims by 2.2% compared to the 2019 study, as did personal injury – plaintiff lawyers (3.58%), family law claims (2.79%), and collections and bankruptcy claims.
The EPIC study had similarities, with trust and estates being in the top three practice areas generating claims, followed by business transactions and corporate and securities. In the Lockton Report, a notable finding was that although the insurers surveyed covered firms who had both litigation and transactional practices, the transactional practices were the most frequent source of claims. Explanations for transactional risk include that professional negligence may be easier to prove in transactional practice areas, transactional claims may offer greater compensatory damages, and an additional risk to transactional practices is increasing claims by third parties.
Despite what may seem like doom and gloom, it is important to set the stage. Eighty-two percent of claims in the ABA Study resulted in no payment of the claim and a decrease in severity of indemnity payments when claims were paid. The EPIC study also reported on the increasing cost to defend professional liability claims, with 10 out of the 11 insurers reporting increases in defense costs. Even if a claim does not result in an indemnity payment, this does not minimize the stress that lawyers and their firms face when a claim is made.
Firm Size
The ABA Study concluded that firms with five or less attorneys comprised most claims. Notably, the same group also had the net largest decrease in claims, correlating to an increase in claims for every other firm size. Firms with more than 500 lawyers saw a 6.48% increase in claims for a total of 11.10% of all claims in 2023 compared to 4.62% in the 2019 study.
Cause of Claim
Five actions (or inactions) have consistently remained the top five activities giving rise to claims. They are: (1) preparation, filing transmittal of documents; (2) commencement of action/proceeding; (3) advice; (4) pre-trial or pre-hearing; and (5) settlement negotiation.
Substantive errors are the largest error category alleged in claims and include failing to know and/or apply the law, drafting errors, conflicts, inadequate discovery/investigation, failure to know/ascertain a deadline, failure to understand/anticipate tax, errors in public record search, and errors in mathematical calculation. Administrative errors follow and include failing to calendar properly, clerical errors, failing to react to calendar, failure to document—no deadline, procrastination, and lost file. Client relations errors follow, with intentional wrongs claims as the least frequently made claim.
Lawyers are much more likely to experience a claim because they failed to commence an action in a timely matter (up 2.73%), had a drafting error (up 3.99%) or engaged in a conflict of interest (up 2.89%).
The EPIC Study found that insurers noted attorney supervision, cyber, and AI risk as top areas of concern for their AM Law 100 and NLJ 250 insured firms.
Evaluating Risk Vis-à-vis Catastrophic Claims
The Lockton Report identified 83 publicly reported settlements or verdicts exceeding $20 million involving law firms dating back to the mid-1980s, with the largest being a $390 million settlement in 2020. The average settlement or verdict was $47.4 million, with the median at $34.5 million. Of these cases, the claims are attributable as follows:
- 39 to dishonest clients
- 13 to conflicts of interest
- 9 to mistakes
- 7 to a combination of dishonest clients and dishonest lawyers
- 5 to a combination of dishonest clients and conflicts of interest
- 3 to a firm’s dishonesty
- 2 to malicious prosecution
- 2 to a mistake combined with a conflict of interest
- 1 to a dishonest client combined with a mistake
- 1 to a dishonest client combined with fraud and misrepresentation
- 1 to a dishonest lawyer combined with a conflict of interest
Representation of an unworthy client represents two-thirds of the reported catastrophic payments, and 17 of the cases in this category involved firms of 1,501 lawyers or more and 26 involved firms with 251-500 lawyers. This is a stark contrast to the ABA Study. Unworthy clients often target larger law firms to benefit from perceived or actual reputational factors. Unworthy client claims are often pursued by third parties harmed. Conflicts of interest are the next chart topper.
Over one-third (29) of these catastrophic cases involved transactional or corporate work followed by securities law (17), commercial litigation (9), real estate (6), bond (5), tax (4), banking (2), bankruptcy (1), intellectual property (2), intellectual property litigation (2), trusts and estates (3), personal injury litigation (1), healthcare (1), and energy (1).
Minimizing Risk
To minimize your firm’s risk of professional liability claims and ethical complaints, there are steps firms and lawyers can consider implementing. Implement supervisory procedures and training for associates and staff. Lateral hires who will serve as “supervisory” lawyers within the structure of your firm should be trained on these procedures and expectations of subordinate and staff supervision.
Engagement agreements should identify the scope of representation and identify when representation will end. If the firm has an ongoing relationship with a client, there should still be a written acknowledgment of the scope of representation for the new matter. Likewise, ensure matters are closed when the identified scope is completed. Firms should also consider adopting a policy on fiduciary relationships, including the review and oversight of lawyers acting as trustees.
Promote the use of a calendar and docketing system. File maintenance and documentation are imperative, including documenting critical client advice. Think about the potential for a claim that the lawyer did not advise the client of all the options. A contemporaneous memo documenting the conversation will serve lawyers and clients well. Providing a written summary following these critical meetings will also help minimize risk in this context.
Client due diligence is required to minimize risk in the unworthy client arena. Implement robust conflict procedures, qualitative intake procedures and general counsel or second partner approval are best practices for clients with red flags. Red flags include clients with a history of firing lawyers mid case, prior malpractice claims/ethics complaints against prior lawyers, refusal to allow contact with prior counsel, dubious referral sources, and prior suits against the client for attorney’s fees. Lawyers should also remember that although a client is a current client, due diligence remains an ongoing consideration. Consider for example, entity leadership and financial condition changes that may impact due diligence. Firms should send a clear message that lawyers should not be afraid to turn down work from any client no matter the size of the book.
Fraud and material misrepresentation claims can arise in transactional business sale matters. If a client refuses to disclose facts, consider whether withdrawal is necessary. Ensure that client representations are the product of due diligence. Beware of fraud and misrepresentation allegations that may arise from settlement negotiations. Do not misstate your client’s financial position and do not simply recite unverified information.
The practice of law is inherently risky. It is impossible to avoid all risks, but minimizing risk is possible. Rely on your firm’s general counsel. If you do not have general counsel available, consider retaining outside general counsel to assist in developing risk management practices and policies. Contact your professional liability carrier who will often have a wealth of resources available to you and your firm as a policy holder. If you have an ethical question related to your own current conduct, the Office of Lawyers Professional Responsibility has a free advisory opinion service. Finally, if you, your family or legal staff are stressed or distressed, contact Lawyers Concerned for Lawyers for free confidential assistance.
Disclaimer: This article is not intended to be relied upon as legal advice. There is no attorney-client relationship between Bassford Remele P.A. and any reader of this article.
