When the Lawyer Screws Up: A Portrait of Legal Malpractice Claims and Their Resolution

Abstract

All professionals make mistakes and sometimes those mistakes harm the clients or patients. What happens when this occurs and the professional involved is a lawyer? Surprisingly, there is virtually no empirical research on legal malpractice. In contrast, there is an extensive empirical literature on medical malpractice and the legal handling of legal malpractice claims. This literature examines the frequency of medical malpractice claims, how they are handled, how they are resolved, and their impact on access to and cost of medical care. The absence of a similar literature concerning legal malpractice is at least somewhat surprising given that there are roughly equal numbers of private practice lawyers and patient care physicians in the United States.

In this paper we provide an empirical portrait of legal malpractice claims and their resolution. We draw on a wide range of data sources including reports published by the American Bar Association, reports from individual insurers, and data sets obtained from insurance regulators in Florida and Missouri. We examine a wide range of questions including the areas of practice producing large numbers of claims, the types of errors alleged in the claims, the practice settings and experience of the lawyers subject to the claims, the likelihood that claims are successful and the amounts paid in damages in successful claims and how the outcomes vary depending on factors such as the area of practice and the size of firm, and the frequency and outcomes of trials of legal malpractice cases including some comparisons to trials involving other types of professional malpractice.

A central finding of our analysis is that there are essentially two hemispheres of legal malpractice paralleling the two hemispheres of the bar identified by Heinz and Laumann in their study of the Chicago bar. In the personal services sector one finds mostly relatively small stakes cases often involving plaintiffs’ personal injury, real estate, family law, and collections and bankruptcy; much of the insurance coverage is provided by mutual insurers started by and/or affiliated with state bars. In the corporate sector stakes tend to be very large, and cases involve corporate matters, corporate litigation, and high stakes areas such as intellectual property and securities; insurance is provided by either by specialized insurers or through brokers who put assemble a group of insurers to cover a large law firm.

Keywords: legal profession, litigation, malpractice