The legal landscape has shifted dramatically since 2020, with economic disruptions, remote work, and evolving risks reshaping how law firms manage malpractice and insurance. 

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The evolving claims landscape

The COVID-19 pandemic and economic volatility created a dynamic risk environment for law firms. Claims and their costs are expected to rise, mirroring patterns from the 2008–09 recession. However, due to slow claim development, the full impact of COVID-related claims may not surface for years. 

Historically, economic downturns have increased lawsuits against lawyers, with payments from past recessions still ongoing. Firms must prepare for delayed but potentially significant claims.

Jurisdictional challenges and preparation

Court closures and delayed trials, particularly in jurisdictions like California, have disrupted legal workflows. These disruptions push firms to focus on operational fundamentals, such as improving case and task management. 

Firms are using this time to strengthen their business practices, preparing for future claims by refining internal processes.

Common causes of malpractice claims

Administrative failures are the leading cause of malpractice claims, particularly missing filing deadlines or statutes of limitations. A single missed deadline can escalate a $250,000 case into a multimillion-dollar claim. 

Another issue is failing to name all defendants in a suit, which, though rare, carries severe consequences. A rise in attorney judgment claims, where clients challenge strategic decisions, even if reasonable at the time, can lead to increased litigation.

The role of technology in risk management

Technology, such as Litify’s case and task management platform, is critical for mitigating malpractice risks. Automated deadline notifications help prevent costly errors, especially when missing a deadline by even one day can trigger significant claims. 

A robust platform like Litify on insurance applications signals strong risk management to underwriters, potentially securing better coverage terms.

Emerging risks in the post-COVID era

• Changing rules and deadlines: Court closures and shifting statutory requirements increase the likelihood of errors.
• Cyber exposures: Remote work heightens risks to client data, with settlement theft via hacked email chains becoming a growing concern.

Additionally, attorneys entering unfamiliar practice areas due to declining traditional work (e.g., foreclosures) face heightened malpractice risks from a lack of expertise. Hughes Ancillary insurance lines, cyber liability, crime, employment practices, and fiduciary coverage are recommended for comprehensive protection at low cost.

Benefits of early insurance applications

Submitting insurance renewal applications early allows brokers like Thompson Flanagan to advocate for better terms across domestic and Lloyd’s markets. Early submissions enable firms to “tell their story,” highlighting strengths like robust case management systems to secure competitive rates and broader coverage. Last-minute renewals often result in rolled-over policies with suboptimal terms.

Why claims are growing

Rising claim sizes stem from increased defense costs, particularly due to complex e-discovery processes and growing fraud concerns. Larger deals can amplify claim values when errors occur, as can the emergence of claims in areas like insurance defense, which were previously rare.

Avoiding overconfidence

To avoid malpractice issues from overconfident decisions, such as advising against favorable settlements, it’s important to document all client communications and decisions.

Clear records protect firms when clients’ memories fade or disputes arise, as undocumented interactions are a leading cause of malpractice claims.

Enhancing client communication

Effective communication is key to preventing client complaints, which often stem from unmet expectations. The top disciplinary complaint in most states is “the lawyer didn’t return my call.” Regular updates, even to report no progress, manage client expectations shaped by fast-paced media portrayals of legal work. 

Platforms like Litify, with built-in communication reminders, help firms maintain consistent client contact.

The takeaway

Law firms face a complex risk landscape and beyond, with rising claims, cyber threats, and jurisdictional challenges. By leveraging technology like Litify for task management and partnering with experts like Thompson Flanigan for tailored insurance solutions, firms can mitigate risks, enhance client trust, and secure competitive coverage. Proactive planning and robust systems are essential for thriving in this turbulent era.