Another response to Malpractice Insurance issue
I have a practice with a heavy emphasis on securities, and when I started out on my own 1 1/2 years ago, I was able to get $500,000 coverage (no more) for about $15,000 (I haven’t rechecked lately). I didn’t think that was worth it. $500,000 isn’t going to do much for the client (or me) when there is a $20 million claim for a private placement gone bad, and the coverage isn’t going to make me be more careful — I have plenty of other reasons to be careful.
When I started out (I previously practiced at 2 big firms for 12+ years, including 3 as a partner), I modeled my practice on a friend’s practice (he’s in Florida). He’s been very successful for about 7 years, and at this point, he’s saved enough money to pay for defense if he gets sued.
Yes, if I have a claim, I’ll wish I was covered (trading $15,000 for $500,000 and legal representation would be a good trade off).
I have had several clients ask about my coverage, and I’ve explained it in the manner above — i.e., any coverage I would get wouldn’t make a dent, and I am a careful lawyer, and I have plenty of reasons to be careful.
I think disclosure is good — maybe in the engagement letter, however, not on the website — I think that the ability to describe things in the engagement letter, etc. would be more beneficial to lawyers and the client.
Tags: Personal Thoughts
Alexander G. Simpson (Admitted in New York & New Jersey)
Alex Simpson PLLC (Corporate & Transactional Law)
(My response: California’s approach is a double whammy, requiring disclosure both in the engagement agreement and on the Bar’s web site. Presumably, then, with public notice, the "side-stepping" described by Alex would be less likely. In other words, the prospective client just would not call the lawyer in the first place; this means the lawyer would not be able to explain it away.
On the other hand, if more than 60% of new business is by referral, it would seem that there would be very little adverse impact on the lawyer … and clients would disregard this notice, especially if lawyers can explain it away as Alex describes above.
And, if there is no economic impact for the lawyer, there would seem to be no impact on the public. If this is the case, why go through the administrative expense of requiring an act that will have no benefit for anyone?)
Categorized in: Personal Thoughts