United States: Looking Ahead To 2016

Like last year, 2015 continued to see law firm revenues drift lower as demand remained weak. With new law firm combinations and greater lateral movement, the number of motions for disqualification also continued to grow.

Trust and estate and probate claims now represent the greatest frequency of legal malpractice claims. While overall the frequency of legal malpractice claims remained constant, that frequency is still higher than it was in the years preceding the 2008 downturn in the legal profession. Not all news is good news, however. Although claim frequency stabilized in 2015, claim severity continues to be an issue. The data shows that legal malpractice claims continued this year to be more expensive than last year, both in the potential damages and in the defense.

The legal malpractice insurance marketplace remains in a state of flux, with some insurers abandoning or selling their books of business while others seek to expand them. Managed programs and bar endorsements are exploring alternatives as the competitive marketplace offers better coverage, expanded services, and enhanced ancillary benefits for insureds.

Both state bars and courts are continuing to develop a focus on "lawyers law" with increased frequency as technology continues to impact the legal profession, creating issues of first impression at an alarming rate. In addition, creative law firm structures, alternative fee arrangements, and the expansion of domestic legal services on a global scale have led to new and unique challenges for law firms and their management while at the same time being the focus for many clients to ensure efficiency and value.

Looking ahead to 2016, it is clear that lawyers law is one area where published literature cannot keep pace with the changes, developments, and evolution of the law. Here are some continuing trends and new issues that are developing:

• It is undeniable that technology has become an integral part of the practice of law. However, with the increased use of electronic mail, the Internet, tablets, and smart phones comes an increased risk of a cyber breach. While firms continue to take steps to avoid such a breach, the highest risk of disclosure of confidential client information comes from "low tech" issues, such as computers forgotten on airplanes, phones left in cabs, and misdirected emails. Law firms of all sizes will need to find ways to protect confidential information and to respond effectively and quickly to lost information in the coming months.
• As legal malpractice judgments continue to increase, with some judgments as much as hundreds of millions of dollars, attorneys and law firms will face new challenges in securing affordable legal malpractice insurance. These challenges will include not only the price of premiums, but the availability of insurance, especially to those that have unsuccessfully defended a malpractice claim in the past.
• As the value of legal malpractice claims continues to rise, so does the media attention on those claims. This means that law firms will need to be equipped to deal not only with a high dollar claim itself, but also with the increased public attention and scrutiny that often accompanies these high-profile claims.
• Legal malpractice claims that arise from representations involving insurance carriers bring with them unique privilege issues. Recent cases have concluded that not all communications between an attorney and an insurer were privileged, even when made with the understanding and intent that they were privileged. These decisions will create challenges for both insurers and attorneys representing insurers or their insureds regarding how to protect confidentiality and privilege, along with how to manage the associated professional liability risks.
• Trust and estate attorneys will continue to face unique challenges that give rise to potential legal malpractice claims. Attorneys in this practice area will continue to be challenged with potential conflicts of interest, complex legal issues, and difficult relationships in an area of the law that often involves highly emotional clients.

Law firm mergers have been prevalent the last few years, as have corporate mergers and bankruptcies. With these changes in business structure come new challenges in identifying and responding to potential and actual conflicts of interest. In 2016, law firms will experience additional challenges arising from these developments and will need to take proactive measures to prevent such conflicts of issue and any resulting malpractice claims.

Below is a list of our publications from 2015, which touch on these many issues:

In addition, Dentons attorneys were interviewed and quoted in articles on areas of legal malpractice law, ethics, and claim prevention. Here are a few examples:

Members of our group presented at more than 25 events this year, including national seminars and webinars, panels at the ABA National Legal Malpractice Conference, on-site client presentations, and numerous state bar presentations and CLEs. As a follow-up to last year's publication of our treatise on California Legal Malpractice Law, we also released the newest edition of Georgia Legal Malpractice Law. Our practical guidebook, The Lawyer's Handbook: Ethics Compliance and Claim Avoidance, also is proving helpful to our clients and colleagues.

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