AI liability claims emerging in lawyers' E&O market, EPIC survey finds – Insurance Business

By Gia Snape
Seven of 13 lawyers' professional liability insurers reported an increase in AI-related claims over the past year, according to the 16th Annual Lawyers' Professional Liability Claims Survey from EPIC Law Firm Group.
The findings are one of the clearest signs yet that generative AI is producing real liability exposure for law firms, not just speculative concern. They also mark a turning point in a market that had discussed AI risk for years without corresponding claims.
"For the first several surveys, underwriters consistently said AI was a concern and were asking law firms questions about it, but they weren't actually seeing claims," said Eileen Garczynski (pictured), principal at EPIC Law Firm Group. "This year, when I asked whether they were seeing AI-related claims, the answer was yes."
The emergence of claims comes as AI adoption accelerates across the legal profession. According to the 2026 Legal Industry Report, 69% of legal professionals now report using generative AI tools such as ChatGPT, Claude, and Gemini for work-related purposes, up sharply from 31% just a year earlier.
That rapid uptake has transformed AI from an experimental technology into a core part of legal workflows, increasing the potential for errors to translate into professional liability claims.
One of the biggest misconceptions for law firms, according to Garczynski, is a misreading of what AI actually is. Not simply an efficiency tool, “in reality… it can generate work that appears authoritative but may be completely wrong."
The profession has already seen several high-profile examples of lawyers being sanctioned for submitting court filings containing fabricated case citations generated by AI systems.
Courts across the US have increasingly warned attorneys that reliance on AI-generated legal research does not excuse inaccurate filings, while regulators have begun issuing formal guidance on how lawyers can use the technology responsibly. Rhode Island became one of the latest states this month to address attorney AI use, with its Supreme Court issuing advisory guidance in June 2026 requiring lawyers to verify AI-generated citations and legal assertions before filing — reflecting growing regulatory concern about misuse.
From a liability standpoint, however, the rules haven't changed – even as firms fold AI into drafting, research, document review, and client service. "Lawyers remain fully responsible for their work product," Garczynski said. "The duty of competence cannot be outsourced to an algorithm."
The solution is to treat AI like any other high-impact technology, including implementing strict human oversight, verification of outputs, and clear internal policies regarding where and how AI can be used, Garczynski added.
Accuracy is only part of it; firms must also manage confidentiality and regulatory obligations tied to AI use. "The firms that get this right will treat AI as an assistive tool, not a substitute for professional judgment," she said.
AI is climbing against a backdrop of rising malpractice activity overall. EPIC found that 8 of the 13 insurers they surveyed reported higher claims frequency year over year – the first meaningful increase in five years – alongside growing defense costs and persistent cyber losses.
AI stands apart, though, because it is a genuinely new category of exposure rather than the evolution of an old one. The novelty is likely to push underwriters toward closer scrutiny of firms' governance, training, and controls; Garczynski said many already ask supplemental questions about AI risk even where formal application language hasn't caught up.
"They want evidence that firms understand the risks and are taking meaningful steps to address them," she said.
The rise in claims activity has not yet translated into major market disruption. Garczynski noted that the lawyers' professional liability market remains relatively stable due to abundant capacity, even as some insurers attempt to manage exposure more aggressively.
However, the combination of rising claims frequency, emerging AI exposures, persistent cyber threats, and escalating defense costs points to a more challenging risk environment ahead for law firms and their insurers.

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