The Bad Idea That Won’t Die

Published January 29, 2008

For the past two Bar years, I have expressed strong opinions against a proposed California Rule of Professional Conduct that requires each California lawyer to disclose in writing at the start of an engagement (and for the State Bar web site to disclose generally) if the lawyer does not have malpractice insurance coverage. I argue that mandatory malpractice disclosure would not protect the public. Providing affordable malpractice insurance to lawyers would, but the State Bar of California does not do so. Only the Oregon Bar does that.

A task force of the California Bar is seeking to require a small group of lawyers, about 30,000 attorneys, mostly solo and small-firm practitioners who can least afford it, to either get malpractice insurance or disclose in writing to their clients that they don’t have it.

As recently as September it appeared the proposal was dead, but at its December meeting, the Board reversed itself. A new version of the rule will be sent out for public comment. Continuing to pursue this action infers that sole practitioners without malpractice insurance are “bad” people. Yet, there is no empirical evidence that this group of lawyers is subject to more malpractice claims than others. They are good lawyers, just economically challenged.

The question can be asked, why has the Board not provided a low cost insurance program for its lawyers who are economically challenged? If the Bar receives millions of dollars from its own insurance program, is there not a conflict of interest here? If we were truly interested in client protection, as proponents claim, we would have had this discussion before entertaining the current proposal.

Some county bar associations, a few State Bar committees and most of the members of the Conference of Delegates of California Bar Association have joined critics in opposing mandatory disclosure. It is interesting to note that most of the lawyers advocating that other lawyers make mandatory disclosure DO have a personal financial stake in the outcome of this discussion. Many represent insurance carriers whose premium income might increase if solo practitioners and small firms felt pressured to sign up for insurance they really can’t afford and don’t need. Doctors are required to disclose whether they have a financial interest in a treatment they recommend. Apparently the same does not hold true for lawyers.

Categorized in: Management

Audience type: Administrators, Associates, Large Law Firms, Small Law Firms, Sole Practitioners