A Bad Economy Increases Risks for Lawyers
Experts may disagree as to whether we are in a recession, but there is no question that our economy has been in a weakened state for a lengthy time period, which may impact professional liability claims for lawyers. For example, virtually all areas of practice for lawyers showed an increase in claims as a result of the 2008-09 recession. As a result, lawyers should be keenly aware of liability exposure as professional liability claims tend to increase during bad economies. Financial concerns may tempt lawyers to engage in precarious behaviors – curtailing risk control procedures, accepting riskier clients, or taking cases in practice areas outside of the customary course of business. Similarly, clients who may more easily forgive an error or perceived bad outcome to a matter may now consider their law firms as a deep pocket that can ease their economic woes.
In this challenging economic environment, law firms must remember the fiduciary duties owed to clients, the ethical duties imposed upon them by the Rules of Professional Conduct, and best practices for avoiding claims. Monitoring and responding appropriately to the following issues will help to minimize a law firm’s exposure.