Legal Malpractice Report

Executive summary

This report summarizes the legal malpractice insurance experience in Missouri from 1999 to 2008.

The charts, graphs and tables in this report are limited to closed claim information and were constructed from data collected by the Department of Insurance, Financial Institutions & Professional Registration as required by Section 383.077 RSMo.  The premium and loss data, obtained from the Missouri Page 19 Supplement to the companies’ annual statements, are presented in the final section.

In 2008, the loss ratio for legal malpractice insurance in Missouri was 24 percent.  For the 10-year period of claims closed* , 666 (27 percent) were closed with payment.  Claims closed in 2008 totaled 231, a .04 percent decrease from the previous year.  The average payment was $84,453.

The cost to an insurer for settling legal malpractice cases (called loss adjustment expense, consisting of legal fees, claims adjustment costs, and related items) has fluctuated over the past 10 years.  In 2008, the average loss adjustment expense for all claims closed with payment was $75,404, compared to $59,236 in 2007.

Indemnity amounts are categorized by claim characteristics, including:

By area of law, the largest share of claims closed in 2008 (60 of 231) was initiated by plaintiffs in personal injury and property damage cases. The largest proportion of all claims closed in 2008 and in the past 10 years involved the alleged errors or omissions that occured during the commencement of the legal action or proceeding.  Of all claims paid during 2008, 38 percent were settled before filing suit or demanding a hearing on the alleged malpractice.
  
Ninety-two percent of losses in 2008 occurred among attorneys with more than 10 years of practice.  The insured's relationship to the claimant is partitioned into four subclasses: free legal service, non-client, member of pre-paid legal plan and client other than free legal service or pre-paid legal plan.  Eighty-five percent of 2008 claims occurred in the category of client other than free legal service or member of pre-paid legal plan.

Only ten companies reported writing legal malpractice insurance in Missouri for 2008.   Of these, the Bar Plan Mutual Insurance Company was by far the largest, with over 80 percent of the legal malpractice insurance market in this state.

This report was compiled using information submitted by insurance companies.  As a result, the accuracy of this report is dependent upon the correctness of each company’s data.  Copies of this report will be made available in braille, large print, or on audio cassette upon request.  Any questions regarding this report should be addressed to the Statistics Section, Department of Insurance, Financial Institutions & Professional Registration, P.O. Box 690, Jefferson City, MO 65102-0690.

The Department of Insurance, Financial Institutions & Professional Registration
is an Equal Opportunity Employer