Legal Malpractice

Are Hemlines, Finances and Legal Malpractice Frequency Related?

By (Andrew Lavoott Bluestone)

It was always a first year economy class aphorism that hemlines were positively correlated with the state of the economy.  Better finances led to brighter prospects, led to more sprightly dresses, with higher hemlines.  A downturn in the economy leads to a similar sartorial downturn.

This article from NY Lawyer  "As Economy Worsens, More Lawyers Being Targeted in Malpractice Suits" seems to say the same thing is true of legal malpractice suits.  "With financial losses piling up in the downturn, real estate lawyers have increasingly become a target of legal malpractice claims, said Bill Loucks, president of Orlando-based Florida Lawyers Mutual Insurance. He said the firm has had a 13 percent increase in real estate-related claims since January. But he said that isn’t entirely related to the real estate market collapse.

“The economy has had an indirect impact on claims, primarily on the real estate practice area,” he said. “Attorneys whose primary practice is centered around real estate went through a real estate boom. ... When the real estate market fell apart, then there was a lot of very close inspection of lawyer-prepared documents.”

Clients of the insurer, which writes legal malpractice insurance, tend to be firms with small numbers of lawyers and solo practitioners.

An American Bar Association study of legal malpractice claims supports Loucks’ observations. Claims in real estate work grew 4 percent from 2004 to 2007 compared with the previous four-year period, according to the report released in September, "

Many claims against lawyers include allegations of errors in transactions ranging from conflicts of interest and closing mistakes to poorly drafted contracts and zoning and escrow issues, the study said.

“Certainly real estate problems are coming out of the woodwork in all kinds of areas. That will continue,” Trazenfeld said. “The rising market covered up a lot of legal malpractice. Now that there’s a downturn in the market all of the malpractice,” claims are sprouting.

One group of clients that are suing real estate attorneys are title insurance firms that have been accused of making legal errors in transactions. Title insurers often turn around and sue their title insurance agents, who typically are lawyers.

Full post as published by New York Attorney Malpractice Blog on December 31, 1969 (boomark / email).