According to “The Specialist Economy”, a white paper from staffing firm Robert Half International, which “examines the trend toward specialization (in the economy and the workforce)”, the high demand for workers in “fields that require both a college education and specialization”, such as law, demonstrates that “firms have a critical need for laser-focused professionals who can help them grow their most lucrative service areas and maximize efficiencies.”
In the legal services field “many law firms have a critical need for experienced candidates to help them expand the most lucrative practice groups, including litigation, bankruptcy, and foreclosure.”
It’s no surprise that specialist lawyers are in demand: their expertise enables them to provide better solutions and service to clients than generalists can, and to work more efficiently, which reduces clients’ costs. This competitive advantage increases over time, as specialists continue to develop expertise in their specialty, and they or their employer allocate support staff, technology, or other resources to support them (which may themselves be specialized), i.e., a paralegal experienced in intellectual property matters, software that automates patent filings and searches, etc., to support an IP attorney. Analogous to the network effect – the more nodes or users a network has, the more valuable it becomes to each user and the network owner – the more expertise a specialist develops, the more valuable he or she becomes to clients, employers, etc.
What does this have to do with legal malpractice risk management, the subject of this blog? Plenty, because specialists are less likely than generalists to make a mistake that leads to a malpractice claim. This not only makes intuitive sense, it’s backed by empirical data, i.e., legal malpractice insurer CNA found that “nearly 70% of all business transactions claims are instituted against attorneys who reported that business transactions practice generated 5% or less of their annual revenues.”
The costs of being sued for malpractice – lost billable time defending the claim, expenditure of your malpractice insurance deductible and a higher premium when you renew, stress, etc., – are so onerous, that attorneys will benefit greatly by reducing their malpractice risk.
Specializing in a single area of practice (AOP) is a powerful risk reduction technique, because it enables an attorney to benefit from the “network effect” described above, and eliminates the risk of dabbling in practice areas that an attorney isn’t expert in, while still producing income via referral fees for cases in other AOPs.
It also happens to align with the dynamics of the legal services market, proving once again that good risk management is good practice management.
About the author:
Curtis Cooper is president of Lawyers Insurance Group – The Attorney’s Insurance Broker, which uses a 3-step process for procuring legal malpractice insurance that minimizes a law firm’s cost and maximizes its coverage:
• We choose from over 50 insurers, based on a firm’s size, location, types of cases, etc.; • We present each firm to suitable insurers, highlighting the factors that make it a good risk, i.e., no recent claims; a moderate caseload per attorney, a high staff-to-attorney ratio, demonstrated expertise in its practice area(s), etc.;
• We negotiate with those insurers to get each firm the broadest coverage at the lowest premium.
For free quotes, email ccooper@lawyersinsurer.com, or call 202-802-6415.
About Curtis Cooper
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