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As Real Estate Prices Drop, Legal Malpractice Claims Rise
Thus far, the decline in real estate prices has been linked to everything from the Wall Street crash and tightening credit markets to lax lending practices by Fannie Mae and Freddie Mac and the resulting low interest rates that contributed to artificial inflation of home prices. But now there's a new scapegoat in town: the lawyers. According to this National Law Journal article, the ABA's 2008 study on lawsuits reveals that legal malpractice claims tied to real estate transactions increased by four percentage points between 2003 and 2007. (H/T to Dirt Lawyer). Real estate related malpractice claims now account for 20 percent of all malpractice claims making them the second largest category of such cases, behind personal injury plaintiffs cases. The ABA study speculates that as the real estate market tightens, individuals and businesses are more likely to blame their lawyers for their losses.
What I can't discern from the ABA Press Release is whether the number of malpractice claims overall has increased. In any event, as the economy goes down, my bet is that all malpractice claims will increase as lawyers desperate for work either venture outside of their area of expertise or take on problem clients whom they might have once rejected to bring in extra revenue. And while you might expect that legal malpractice lawyers will stay busy, I'm not so sure about that either. After all, struggling lawyers may decide to cut back on or even forego malpractice insurance, making them a less desirable target for lawsuits.
Have you noticed more malpractice claims in your practice area? And how are you or your colleagues reacting to the increased threat of malpractice in any area?
Posted by Carolyn Elefant on October 1, 2008 at 04:08 PM | Permalink
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