The combination of the economic downturn, the wave of recent investment scandals, the upsurge in lawyer liability claims in the wake of the dot-com collapse and the Enron and WorldCom scandals, and the always lurking risk that culpable parties will lack sufficient assets to meet claims, has led insurers of law firms to anticipate increased claims targeting firms as deep pockets. The anticipated increase in claims has yet to materialize, however, and some comfort may be taken that it never will, as the courts have continued to apply established legal doctrine to screen out legally inadequate claims against law firms even in the face of sympathetic-sounding facts and massive losses.
Evidence of this trend is found in two recent decisions that rejected substantial liability claims asserted against major law firms. Both cases involved all-too-plausible potential nightmare scenarios for the firms involved: one, an adverse litigation result where the court’s unexpected decision points the finger directly at counsel; the other, the fallout from a massive fraud committed by a firm’s longstanding client.
