Liability Insurer Data as a Window on Lawyers’ Professional Liability

Abstract

Using the best publicly available data on lawyers’ liability claims and insurance – from the largest insurer of large law firms in the U.S., the American Bar Association’s Standing Committee on Professional Liability, and a summary of large claims from a leading insurance broker – this article reports the frequency of lawyers’ liability claims, the distribution and cost of claims by type of practice, the disposition of claims, and lawyers liability insurance premiums from the early 1980s to 2013. Notable findings include remarkable stability over thirty years in the distribution of claims by area of practice among both small and large firms, a large percentage of claims (64-70%) involving de minimis expense (less than $1000) in the small firm market, and in the large firm market a declining rate of “real claims” per 1000 lawyers, a declining rate of real average gross loss per claim, and stable real premiums per lawyer since the early 1990s. Because of data limitations, however, these results cannot be confidently generalized. Further advances in the understanding of lawyers’ liability and insurance will require qualitative research.

Keywords: Torts, professional negligence, legal malpractice, professional responsibility, ethics, insurance, damages, empirical studies, quantitative analysis, liability insurance premia, large firm liability, small firm lawyer liability, lack of mandatory reporting

JEL Classification: G22, K13, L84