Clever Lawyers and Bad Lawyers

Published February 22, 2011

A reporter recently asked me if the trend toward the mandatory disclosure of malpractice insurance has resulted in any striking trends in the behavior or practices of the solo practitioners who are most affected. I replied that, as a practical matter, lawyers are very clever. They are wordsmiths as well as effective in finding loopholes. The loophole in this process is either to bury the disclosure notice so that it’s not an obvious part of the engagement process, but still complies with the code, or by passing it off as an unnecessary requirement required by the State Bar that doesn’t change anything for the client.

This latter statement is, of course, completely accurate. Remember who we’re talking about: the 20% of the lawyer population who are good lawyers in their clients’ minds, but who the State Bar has now labeled as suspect. Yes, there are problem lawyers, but there was never any study brought to light to show who “bad” lawyers were as a group and how mandatory malpractice insurance disclosure can help either prospective clients, current clients or injured clients. The real remedy, mandatory errors and omissions coverage, is still too politically charged for virtually all Bar associations to consider.

Mandatory bans of retainers for loan modification come under the exact same heading of being “unnecessary,” and worse, disenfranchising the very people who currently have major problems because of the financial and housing crises, an “upside-down” homeowner. All loan modification lawyers are considered bad because a few are. The basic dynamic is simple – if a lawyer takes money in advance of the work and places the money into a clients’ trust account, they can be assured of being paid on completion of the work. If the work is not completed, the money is not withdrawn and returned to the client. The penalty for withdrawal without doing the work is disbarment and prosecution for theft. The practical effect of the prohibition is to ban retainers for this type of matter, thereby preventing problematic homeowners from getting expert advice from a lawyer; this prohibition is not done in any other context.

Disbarment – being stripped of one’s license to practice law – is the most severe professional penalty a lawyer can receive. Rule of Professional Conduct 8.5 states that a lawyer is subject to disbarment, or any disciplinary action, under the rules of the jurisdiction where that lawyer is admitted to practice, “regardless of where the lawyer’s conduct occurs.” What conduct? The commentary on Rule 8.4 proposes that, “Although a lawyer is personally answerable to the entire criminal law, a lawyer should be professionally answerable only for offenses that indicate lack of those characteristics relevant to law practice. Offenses involving violence, dishonesty, breach of trust, or serious interference with the administration of justice are in that category.” This remedy, not some vague desire to “protect the public” as symbolized by mandatory insurance disclosure or mandatory retainer bans, should remain the focus of a self-regulating State Bar.

Categorized in: Ethics, Management

Audience type: Small Law Firms, Sole Practitioners