Examining legal sector claims post-pandemic: Insights from 2020 to 2023

QualityPI provides their insight into examining legal sector claims post-pandemic, with insights into the subject from 2020 to 2023.

As we move through 2024, it’s crucial to understand how the post-pandemic landscape and economic challenges have impacted claims in the legal sector over the past few years.

Analysis of data from Travelers, one of the leading PII insurers for solicitors since the open market began, provides valuable insights into the shifts and trends in claims against law firms, highlighting significant changes in the various areas of legal practice.

Travelers has identified several factors that have contributed to professional negligence claims, offering a deeper understanding of the challenges faced by law firms such as:

• • Missed limitation dates: A frequent issue leading to claims when important filing deadlines are overlooked.
  • Inaccurate retainers: Missteps in outlining the scope of services can result in disputes and subsequent claims.
  • Not following instructions accurately: Failure to adhere to client instructions often leads to dissatisfaction and claims.
  • Poor client communication: Miscommunication or lack of communication can undermine trust and lead to claims.
  • Fraud and cyber-security: As cyber-threats become more sophisticated, they pose increasing risks.
  • Drafting errors: Errors in legal documents are a common source of claims.
  • Process failures: Breakdowns in internal processes can result in issues such as missed deadlines and incomplete documentation.

A 2023 report from Travelers provides a deeper dive into these trends. The report illustrates that retainer management has consistently been a significant issue over the past five or six years, accounting for approximately sixty percent of all claims, and is continuing to grow.

While issues related to advice are beginning to decline, other areas such as drafting errors and dishonesty are on the rise. Notably, dishonesty claims have shown the steepest increase, largely driven by various forms of cyber fraud.

Despite best efforts, legal professionals often face negligence claims as an unavoidable part of their practice. Just because you think that you have done nothing wrong doesn’t mean that you won’t have to prove it. 

Both anecdotally and statistically from a similar report recently published shows that around 75% of claims notified to insurers result in being closed without any payment being made by the insurer. But that doesn’t mean that there hasn’t been a cost to the firm.

With ongoing economic challenges, clients are more likely to seek accountability for their financial losses. To protect themselves against such claims, legal firms must implement robust risk management strategies.

The findings from Travelers highlight the importance of meticulous processes, clear communication, and vigilant risk management to mitigate potential claims and ensure they are well-prepared to address any issues that arise.

In summary, the evolving landscape of the legal sector underscores the need for law firms to adapt and enhance their practices continually. By focusing on improving retainer management, reducing drafting errors, and bolstering cyber-security measures, firms can better navigate the complexities of the post-pandemic era and mitigate the risks of professional negligence claims.

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