Insurers of lawyers say they are seeing higher-severityclaims due in part to the rising costs of litigating complicatedsuits.

A survey conducted by insurance-brokerage and risk-managementconsultant Ames & Goughfinds frequency of Lawyers’ Professional Liability claims hasleveled off, but the number of large claims has risen.

The dynamic could sink a small or midsize law firm, says EileenGarczynski, a vice president at Ames & Gough.

“Many firms don’t have high limits,” she says. “Law firms shouldbe looking at whether they have enough to cover and defend a caseagainst them.”

The six participants in the survey—AXIS, Beazley, CNA, Fireman’sFund, Hartford and Ironshore—hold about 75 percent of the Lawyers’Professional Liability market for midsize to large law firms, withCNA appearing on nearly every large program, says Garczynski.

Multiple insurers can be involved with the same quote-shareagreement.

Five of the six insurers have seen an increase in the number ofclaims in which they set aside more than $500,000 for losses andexpenses. In fact, four insurers say these types of cases rose atleast 11 percent since the first survey Ames & Gough conductedat the same time a year ago.

“That is a statistic that stands out,” Garczynski says. “That’shuge.”

In addition, four of the six insurers say they paid, orparticipated in paying, a claim of $100 million or greater.

According to four insurers, the largest number of claimscontinues to originate from the real-estate practice area, drivenby the recession, they say—but these claims are starting to leveloff. The other two insurers say lawyers doing corporate andsecurities work generated the most claims.

These claims arise out of mergers and acquisitions and othertransactions, as well as Ponzi schemes. Trustees looking to recoupfunds for investors drag in attorneys who may have assisted theoffender.