Malpractice Insurance Disclosure Sent to Committee

The State Bar of California’s Board of Governors narrowly voted to amend the current proposal to require lawyers who don’t carry malpractice insurance to disclose this fact to their clients. The amendment would require such disclosure only in those situations where a lawyer is required to have a written engagement agreement pursuant to Business & Professions Code §6147 & 6148.

That amended proposal, then, was defeated; a subsequent sense of the Board was to send this issue to its own committee (Regulations, Admissions & Discipline Committee, not the original task force that was submitting the proposal) for further study. Two issues were uppermost in the Board’s mind. One was whether the amended proposal could be adopted by the Board without further public comment and, second, whether the full ramifications of the original proposal were completely understood by the Board.

It is hoped that the RAD committee will be successful in addressing the issues that face all of the stakeholders involved, the public and members of the Bar, without the perception of self-interest or financial gain for the Bar … and with the interest of all lawyers in mind (including the 30,000 not currently insured).

Following are additional challenges to the current proposal and issues that must be addressed to be fair to all:
•    The proposal does not address the underlying issue of how clients are going to be taught what insurance coverage means and why it should be important to them
•    The proposal does not deal with the effect of lawyers who are self-insured, but insured perhaps at levels that would be insufficient to cover a reasonable complaint
•    The proposal does not address the only real protection (under this approach) that clients could receive, and that is by requiring that all lawyers must have malpractice insurance
•    The proposal does not provide a mechanism that allows all attorneys to get insurance at an affordable price (as does the Oregon system); some lawyers are denied insurance coverage because of their practice area.
•    The proposal is an ineffective mechanism to address the real issue of more than 50% of the disciplinary system’s complaints: Poor management skills of the lawyers against whom complaints are brought

On the contrary,
•    The proposal singles out only 30,000 lawyers – mostly sole and small firm lawyers – and labels them as lawyers who are a menace to society
•    The proposal seeks to address a legitimate concern of clients – that there lawyer be competent – through the back door. Help lawyers become more skilled and more effective in the management of their practice. Then, the complaints will decrease markedly and this proposal will be unnecessary.
•    The proposal violates the Board’s recent statement of policy that The State Bar has TWO reasons for being, one to protect the public and one to enhance the well-being and skills of its members. This proposal strays from the second objective of the Bar WITHOUT truly protecting the public. This proposal is only a façade, a band-aid that is too small to protect the perceived wound.  To paraphrase an idiomatic expression, “It’s not fish and it’s not fowl; and therefore, it smells.”

This proposal smells of self-interest, lacks the protection it claims to offer the public and hurts 20% of the Bar members without sufficient reason to do so.

It was said that only 150 lawyers objected to the original proposal. Yet the Executive Committee of 2 out of 16 State Bar sections, representing 12.5% of active lawyers in the State registered their opposition. This is a significant opposition and the rationale for their opposition should be carefully considered. It should be noted parenthetically that no State Bar section favored the proposal.

It was further said that if the State Bar fails to act, the State Supreme Court will. First, there is no evidence of this. On the contrary, it’s quite as likely that the Court will not tread on grounds where the Bar is so divided and the rule so inept as to fail to achieve its own stated objective. Enacting a "feel good" proposal that misses the mark so badly is inappropriate. It’s a preemptive strike on the wrong target!

Hopefully, the next review of this issue will produce a more reasoned and effective result.

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