Artificial intelligence has moved from a theoretical concern to an active source of legal malpractice claims, according to EPIC Insurance Brokers & Consultants’ 16th Annual Lawyers’ Professional Liability Claims Survey, a development that insurers are tracking alongside rising claim severity and the continued appearance of losses exceeding $100 million.
The survey gathered input from senior claims executives at 13 lawyers’ professional liability insurers that collectively provide coverage to more than 80% of firms in the Am Law 200.
Seven of the 13 insurers surveyed reported an increase in AI-related claims during the past year.
“What is most concerning is that AI-related malpractice exposure has moved from theoretical to real”, according to Eileen Garczynski, principal of EPIC Law Firm Group and author of the survey. “The duty of competence cannot be delegated to technology.”
The findings arrive while AI adoption continues to spread across the legal profession. Industry research published by the International Bar Association has found that law firms are increasingly using AI for administrative and operational functions, while larger firms are deploying the technology in more client-facing work. The association also reported that lawyers expect AI to affect law firm structures, hiring practices and business models, placing greater attention on training and oversight.
Beyond AI, the survey points to a broader change in the malpractice environment.
“After five years of relative stability, we are seeing a clear inflection point,” said Garczynski. “Legal malpractice claims frequency is rising again, and severity continues to accelerate, driven by economic pressure, increasingly complex work, and new risk vectors, like AI, that law firms are still learning to manage.”
Eight of the 13 insurers reported higher claim frequency compared with the previous year. Respondents also cited continued growth in large-loss claims, including matters reserved or paid in excess of $100 million.
According to the survey, malpractice claims involving nine-figure losses are no longer viewed as unusual outliers. Insurers linked many of the largest losses to complex transactional matters where a single error can carry substantial financial consequences.
While AI has emerged as a source of claims activity, longstanding malpractice exposures continue to generate a significant share of losses.
Conflicts of interest remained the leading cause of legal malpractice claims. Among insurers surveyed, 46% ranked conflicts as the first- or second-most common error.
“Conflicts of interest continue to be the most dangerous malpractice exposure for law firms – not because they are intentional, but because they are often missed, poorly documented or inadequately revisited as matters evolve. Courts and clients treat these failures with zero tolerance.”
Transactional practice areas, including business transactions, corporate and securities matters, and trust and estate work, continued to account for much of both claim frequency and severity. Insurers attributed losses in these areas to the financial scale of engagements, complex documentation and outcomes that can be difficult to reverse.
The survey’s findings align with a wider discussion within the legal sector about AI’s role in legal work. Legal industry publications have noted that AI is increasingly being used to handle routine tasks such as document review, legal research and administrative work. At the same time, legal organizations and educators have stressed that lawyers remain responsible for verifying outputs and maintaining professional standards, particularly following court cases involving inaccurate AI-generated citations.
Insurers also identified cyber risks, fraud and client intake practices among recurring areas of concern.
Wire transfer fraud remained a significant source of losses. According to survey respondents, many incidents stem from failures in verification procedures and continued reliance on email-based instructions despite established controls and longstanding industry warnings.
The cost of defending malpractice claims also continued to increase.
Eleven of the 13 insurers surveyed reported materially higher defense spending year over year.
“Escalating defense costs are reshaping the economics of professional liability,” according to Garczynski. “As claims become more complex and rates continue to climb, insurers are being forced to respond.”
A majority of insurers surveyed indicated plans to raise rates in 2026.
Taken together, the survey points to a claims environment that includes established risks such as conflicts of interest and cyber fraud alongside emerging exposures tied to AI use. The findings also indicate continued pressure from rising defense costs, increasing claim frequency and the growth of large-loss matters, including claims exceeding $100 million.
