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The number of eye-popping legal malpractice payouts surged in 2019, according to a recent study by insurance broker Ames & Gough, but the business disruptions posed by the COVID-19 crisis suggest that last year will only be a precursor.

The 2008 recession proved to be a trigger for a previous wave of clients going after their law firms in court. And in the coming years, distressed businesses will undoubtedly look at contracts that weren't enough to shield them from the manifold consequences of an economy that was abruptly forced to shut down and seek to pin blame on their lawyers.

"Last year's rise in the number of claims, compared to the next few years, is likely to look like a Sunday picnic in the park," said Clyde & Co. professional responsibility expert Anthony Davis.

In the study, Ames & Gough polled 10 leading lawyers' professional liability insurance companies, which collectively insure roughly 80% of the Am Law 100. Eight of the 10 said that the volume of claims brought in 2019 was either the same or higher than in 2018, with six pointing to an increase. This was the first year since 2013 that claims had grown from the previous year.

The largest number of claims stemmed from three areas, business transactions, corporate and securities, and trusts and estates.

It's unsurprising that a brisk economy would yield growing amounts of transactional and securities work, prompting the number of flawed representations to rise proportionately.

"With so much riding on the success of any deal, clients inevitably point fingers at their lawyers when things don't go as planned," Eileen Garczynski, senior vice president and partner at Ames & Gough, said in a statement. "Once a firm accepts this type of engagement, it should immediately identify any potential risks and make sure they have all the resources and capabilities needed to handle the related work effectively."

And demand for trusts and estates work has also risen, thanks to demographic transitions, prompting a wave of inter-generational money transfers.

The severity of claims has grown as well. All 10 insurers had at least five claims in which the reserve, the sum of indemnity and defense costs, exceeded $500,000; while six had over 21 such matters. Meanwhile, eight of the insurers had participated in at least one claim of over $100 million in 2019, and four had been parties to over three such matters.

With the COVID-19 pandemic wreaking havoc on the global economy, firms will undoubtedly be getting used to the heightened level of activity. But that doesn't mean it's pointless to take measures to manage risks, including paying careful attention to supervision of lawyers, suitability of clients, and staying within the bounds of their engagement letters.

One potential landmine is when firms are asked to defend the same contracts they've originally drafted, after they've been called into question. This scenario presents the possibility of lawyers developing a self-interest that diverges from their clients.

"Before undertaking this kind of litigation, firms need to have an internal or, better yet, external review of the underlying work product, and then still make adequate disclosure to the client and obtain an appropriate waiver. On an ongoing basis, firms have to remain conscious of the conflict and tell the client, 'This is why we're doing it this way,'" Davis said. "The risk of not adhering to the conflict of interest protocols, and defending the prior work at all costs may, in the most egregious cases, give the client a second malpractice claim—one based on the the underlying mistake and the second based on the way the firm litigated it."

And expect the surge to continue for years. While the first wave will focus on the drafting of those contracts under dispute, the second wave, on how these contracts are defended, will be based on actions that have yet to happen.