Business Transactions Practices at Law Firms Deceptively Risky
July 2, 2012 09:00 AM
A study performed by CNA, a large writer of lawyers professional liability insurance, revealed business transactions and commercial law work rank among the riskiest service areas for smaller firms. In reviewing nearly 1,000 closed claims, more claims arose from "business transactions" services than any other area. CNA defined business transaction services to include crafting and negotiating contracts and other commercial transaction agreements. Many professionals do not see this as an area of high risk.
"While the study focused on CNA's actual claims data for firms of less than 35 attorneys, the study highlights valuable lessons for firms of all sizes," stated Johnathan Wynn, Executive Vice President at Lemme Insurance Group, Inc. "CNA's data shows a high percentage of business transactions claims are against firms performing small percentages of this work. The data suggests the real issue is inexperienced attorneys underestimating the complexity of these matters combined with a lack of resources to support the demands of such an engagement. As with most law firm practice areas, experience and dedication of necessary resources can reduce the risk of claims. Demonstrating critical mass in practice areas known to generate claims is often viewed favorably by underwriters, and can help keep premiums competitive, too."
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