Solo lawyers and malpractice insurance debate

Sole and small firm practitioners have more at stake than insurance in the current debate at the California Board of Governors over mandatory disclosure of malpractice insurance coverage, much more! Their very existence is threatened. Perhaps that is an overstatement. What is clear, though, is that the economic well-being of this group, and the very survival of many individuals in this group, is being threatened. 

Jeff Bleich, President of the California State Bar, states his case very succinctly in the March 2008 issue of California Bar Journal. He starts by saying “… small and solo practitioners are justified in demanding that the State Bar be more sensitive to their concerns…solos have a right to demand that any new obligation imposed by the State Bar is there for a good reason …”  (Emphasis added.)

But, President Bleich counters this philosophy, however, in his very next column (April 2008) when he says “The work of the State Bar ultimately is to protect the public and to ensure that the people of California have access to the legal help they need. Although the bar (sic) provides benefits and other services to lawyers, it does this not as an end in itself, but instead to help lawyers better serve the public …”

It appears quite clear from his comments that he believes the Bar has only one goal, to serve the public. What happened to the Board’s pronouncements two years ago when then President Jim Heiting said the Bar has two, co-equal goals, one to protect the public and the other to protect its members, lawyers, who need help in many different areas in order to be more effective and efficient in delivering legal services to the public? Has one of these two symbiotic, intertwined priorities now been abandoned?  Seems to be … especially if we believe that helping lawyers is only a means to an end, not a co-equal end!
   
Again, I ask why this group of lawyers have been singled out?  California Business & Professions Code 6171 (b) and Law Corporation Rules created thereunder allow professional corporations to escape this requirement!!!!  Under Rule IV of the California Rules, shareholders of a professional corporation can sign a simple statement that they will be responsible for paying malpractice judgments. Do this, and you don’t need malpractice insurance! The last time I checked, a sole practitioner is personally liable for any such judgments anyway … So why do we need to have the current proposal adopted by the Board of Governors? Why is a group of 30,000 sole and small firm practitioners being harassed?

There continues to be no evidence that mandatory disclosure of whether a lawyer has malpractice coverage is necessary to “serve the public.” There is only anecdotal suggestions. But this commentary appears on both sides of the issue as is evident in Letters to the Editor of the California Bar Journal. Continuing to pursue this action infers that sole practitioners without malpractice insurance are “bad” people. Yet, this group of lawyers is not subject to more malpractice claims than others. They are good lawyers, just economically challenged by the cost of malpractice insurance.

There has never been a suggestion that the Board is controlled by the insurance industry. But, it is true that the Bar receives many revenue dollars from the industry. And, contrary to President Bleich’s inference, the current Bar insurance programs do not claim to provide lower cost insurance to California lawyers. In fact, to this date, when asked, those on the insurance committee will admit that there are less expensive programs available elsewhere.

President Bleich says the current proposal doesn’t require the purchase of insurance … does this serve the public? Does not requiring the insurance, but nevertheless attacking lawyers’ economic interests, indicate a sensitivity by the Board for sole practitioners? I think not. What would serve both the interests of the public and the lawyers is to have affordable insurance available. Until then, there should be no meddling with the current status quo.

Lawyers will be hurt; that is, those estimated 30,000 lawyers (without reference to those in professional corporations) who currently do not have malpractice insurance will be hurt. And if they are hurt, their clients, typically the people who cannot afford the large law firms, will be hurt.  Here’s the rub: How does this provide greater access to the legal help the public needs?

Categorized in: Cash Flow - Finances, Management