Mandatory Disclosure If No Malpractice Insurance

Q: As a sole practitioner, I’m nervous about the possibility that new requirements that lawyers must disclose in writing if we don’t have malpractice insurance. How will mandatory disclosure affect my business?

A: A little more than a year ago I strongly argued against a proposed new California Rule of Professional Conduct that would have required each California lawyer to disclose in writing at the start of an engagement and on the State Bar website if the lawyer does not have malpractice insurance coverage.

In late September the California State Bar Board of Governors defeated this proposal by a 9 to 8 vote. An amended version of the proposal that would merely delete putting the malpractice disclosure information onto the State Bar’s website was then proposed, discussed, and then tabled. The issue will be discussed in November with one-third of the current Board having been replaced by its annual election.

Dodging this bullet still does not change the basic problem. The vast majority of lawyers are ethical and do not commit malpractice. The vast majority of clients do not sue for malpractice. But mandatory disclosure of the absence of malpractice insurance waves a red flag that could spur clients to file actions against the lawyers who are helping them, but simply cannot afford the insurance. Mandatory malpractice insurance disclosure symbolizes a massive cost that most lawyers simply can’t afford. In addition, and perhaps more telling, the current proposal does not protect the public (the asserted reason behind the proposal). And that’s why I continue to oppose it.

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