By Anita Rice


Law firms should prepare themselves for a sharp rise in professional negligence claims, as they are seen as a 'financial jackpot' for litigants during an economic slowdown, experts warned this week.



High street conveyancers are likely to be 'in the front line' of a distinct upturn in negligence claims, solicitors were told.



Mark Fowles, head of insurance at south-west firm Veitch Penny, told the Gazette there were likely to be more opportunistic claims against law firms. He said: 'Harsher economic conditions produce more claims and probably more professional negligence claims. In these times, you also see more desperate claims... People do seem to view the law as a financial jackpot.'



Barney Micklem, professional indemnity partner at City firm Reynolds Porter Chamberlain, added: 'The harder money is to come by, the more inclined people are to sue others, and in particular their professional advisers'.



He said some solicitors' professional indemnity insurers were already reporting an increased number of property-based fraud claims, adding that 'the floodgates have not opened - yet.'



He said: 'A combination of higher interest rates, which cause over-stretched borrowers to collapse, and falling house prices, which unstitch fraudulent schemes based on multiple loans, inevitably leads to a great number of claims.'



Anna Fleming, claims manager at insurer Zurich Professional, said the economic slowdown was likely to put conveyancing solicitors 'in the line of fire' of lenders hit by the drop in the housing market and the increase in mortgage fraud. She said: 'Lenders will be trying to recoup money and the first person they look to is the professional. The poor high street conveyancer is likely to be in the frontline, as conveyancing is their bread and butter work.'



George Staple QC, consultant at magic circle firm Clifford Chance, said a hike in litigation would be 'in line with past experience' in a tough economy.



The warnings come as a survey of finance directors at the top-100 law firms by publisher Sweet & Maxwell found that some 24% of respondents thought professional negligence claims were a 'very significant risk to profitability' this year, compared to 14% last year.