Malpractice Claims Are No Longer Theoretical

The 2026 Annual Lawyer Professional Liability Survey by Freeman Mathis & Gary marks a structural inflection: for the first time, the survey shows simultaneous increases in both claim frequency and severity, and 7 of 13 participating insurance carriers are reporting actual AI-related malpractice claims. Nine of 13 carriers have reserved at least one claim exceeding $100M in the past two years — a severity threshold that changes how risk managers at mid-sized firms should be pricing their AI exposure. Business transactions (53%) and corporate/securities (46%) are the leading claim sources, which maps directly onto the practice areas where mid-sized firms are most aggressively deploying AI for contract review and diligence. The authors describe a "perfect storm" of economic volatility, complex transactions, and accelerating AI adoption converging to elevate risk. Firms that have deployed AI tools without corresponding verification protocols, billing disclosures, or policy guardrails face the most acute exposure.