Malpractice insurance disclosure
The tidal wave has not yet struck! That means there is still time to save ourselves.
The California State Bar Board of Governors voted today on the proposal to require disclosure to prospective clients that they do not have malpractice insurance (if they don’t). Other lawyers who are either exempt under the rule or who do have E & O coverage do not have to discuss malpractice insurance or disclose anything about the subject in their engagement agreement.
The proposal would require that the lawyer disclose the absence of such coverage to the client, report that lack of insurance to the State Bar which then post the information to the profile of the attorney on the Bar’s website.
This proposal was defeated by a 9-8 vote. An amended version of the proposal that would merely delete putting this information onto the State Bar’s website was then proposed, discussed and then tabled. The issue will be discussed in November with 1/3 of the current Board having been replaced and, ostensibly, unfamiliar with the nuances of the subject … unless the new Board members do a lot of review and catch up.
Among many faults of this proposal are the following that were raised today during discussion by the Board and others in attendance:
- What is the problem seeking to be fixed? There has been no clear statement of the problem
- Is this the best solution to the suggested problem
- What mechanism is in place or proposed that would monitor the results one, two or three years from now to let us know if this proposal fixed the problem
- Without a means of measuring the progress and results of the proposal, it is merely a wasted effort with potential serious consequences to a very important segment of the Bar
- Only 30,000 lawyers are being targeted by this measure; this is the estimate of those who do not presently carry malpractice insurance
- There is no evidence that these lawyers are bad lawyers, have been disciplined or otherwise should be singled out as a separate category
- The focus of "public protection" is a "red herring," as one Board member suggested; there will be more harm and confusion created by the proposal than benefit for the public
- There will be little or no transparency for the client for many reasons
- A one line statement of non-coverage can be discreetly placed in an engagement agreement such that a client will never react to it
- There is no minimum coverage required in this proposal, thus allowing the lawyer to obtain a minimum policy which, after defense costs are removed from the primary coverage, will still leave the client without funds to make him/her whole
- The assertion that clients want to know whether the lawyer has coverage is without evidence … it is merely an assertion. A contrary assertion is equally valid — that the client comes to the lawyer by a trusted referral and is not interested in discussing insurance
- A discussion of insurance pits the lawyer against the client — it immediately sets up an adversarial environmengt
- We live in an entitlement mentality society. If things don’t go "my way," it is then that the client looks for someone to blame and to pursue a claim still further. It is never the client’s fault or responsibility. And until that moment, the client generally doesn’t care about the issue of insurance. This proposal merely plays into the hands of that mentality. It does not squarely face the legitimate public concerns issue that surround this discussion.
- And, again, I suggest that if client protection were the real focus in this matter, mandatory insurance might be the solution … but it is asserted by the proponents of this proposal that that would never be accepted politically … and that this is the first step that is needed.
- Though I don’t want to be a cynic, let me close with a couple of observations:
- The head of the California task force was also the head of the ABA task force … i just learned that this afternoon; seems to me that there is a vested interest in "proving himself right" by bringing this matter to California
- The proponents of this measure likewise tend to be self – interested: They are malpractice coverage attorneys who get paid better if their clients are covered by insurance; they would not have to work "pro bono"
- The State Bar does not come to the table with clean hands — it has an insurance program that it promotes and earns a lot of money from …
- As was pointed out late in the discussion, the task force failed to have on its panel an important constituencies most affected by this proposal: The lawyers who are in the trenches who will be impacted by this proposal and the low to middle income public.
- The members of the task force … and the lawyer members of the Board … are at the 50,000 foot level … they need greater sensitivity to the lawyers at the ground level before they create such rules.
This is a band-aid on the wrong wound! Just one man’s opinion. Thanks for listening.Tags: Cash Flow - Finances, Management, Marketing, Personal Thoughts