Real estate is riskiest practice area, ABA survey finds

Legal malpractice insurers for the first time are reporting a higher percentage of claims involving real estate than any other practice area, according to a new survey from the American Bar Association.

But real estate’s “first-place finish” may be due in part to a decline in alleged malpractice by personal injury practitioners, explained the authors of the ABA’s “Profile of Legal Malpractice Claims: 2008-2011.”

“The authors believe that failed real estate (and other business) transactions likely were the source of increased claims in the 2011 Study, but it would be a leap to state that is definitively so based on the data,” the report states.

According to the 2011 study, real estate practice accounted for 20.33 percent of legal malpractice claims, followed by personal injury (15.59 percent) and family law (12.14 percent).

The 2011 study, released by the ABA Standing Committee on Lawyers’ Professional Liability, is the sixth study of legal malpractice claims conducted by the ABA since 1985. In all five previous versions of the survey, personal injury matters were ranked first in generating legal malpractice claims, according to an ABA press release.

A panel of claims experts presented the “snapshot of the legal malpractice claims environment” provided by the study in the opening plenary session of the ABA’s National Legal Malpractice Conference in Chicago on Sept. 6. The study offers a chance to examine the relationship between firm size and potential claims and whether there really are “risky” practice areas, as distinct from “same mistakes, different types of law,” according to the program preview.

The 2011 study is based on an analysis of 53,000 claims reported by 28 U.S. and Canadian insurance companies, 20 of which are members of the National Association of Bar-Related Insurance Companies.

According to the study, the activity “preparation, filing and transmittal of documents” retained its historical position as the activity most likely to generate a malpractice claim against an attorney. The latest data found “advice” as the second most likely activity to generate claims.

In addition to analyzing malpractice claims according to area of practice and type of activity, the study also addresses other variables, including the number of lawyers in the firm, the disposition of claims and indemnity dollars paid to claimants.

“The committee’s report will give law firm risk managers, lawyers practicing in the field and legal malpractice insurers valuable insights into the areas of law, types of activity and other variables that give rise to malpractice claims,” said ABA President Laurel Bellows in a statement.

The survey, published Sept. 1, can be ordered from the ABA.

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By Pat Murphy