Mandatory Malpractice Insurance Only Hurts Law-Abiding Lawyers
Connecticut Law Tribune - February 12, 2007
Mandatory malpractice insurance? In the Feb. 5 edition of this paper, the "Advice of Counsel" column discussed ways to discourage attorney malfeasance (theft of client funds). One suggestion made to discourage criminal behavior, thereby protecting clients' funds, is to make malpractice insurance mandatory, or at least give lawyers strong incentives to have such coverage.
The author believed more lawyers would be inspired to take continuing legal education courses so they could keep their skyrocketing malpractice insurance rates at bay or reduce them by a negligible amount.
Once again, the medical profession is held out as an example of this logic. But the column clearly stated that there is no correlation between malpractice insurance and continuing education for doctors and a reduction in actual medical malpractice.
Huh? What I can tell you is this: forcing lawyers to purchase malpractice insurance for this purpose would itself be a crime. It's called extortion
And the ones who will be harmed the most are solo and small firm practitioners who already struggle under the weight of malpractice insurance premiums.
Lawyer malfeasance usually doesn't stem from ignorance of how to handle a client's funds. It's criminal behavior. Mandatory malpractice insurance and continuing legal education will not curb criminal behavior. If you have a criminal mind, you have a criminal mind. And it is a criminal act when a fiduciary knowingly takes money that does not belong to him. And...most major malpractice carriers do not cover acts of malfeasance!
Forcing lawyers into "voluntary" continuing legal education presumably to get lower rates on grossly overpriced malpractice insurance is, honestly, a ridiculous concept. The logic simply doesn't flow anymore than the belief that gun laws stop criminals from having guns.
Criminal behavior will not be curbed by imposing rules and additional expenses on non-criminal attorneys. It would be just more hard-earned dollars flowing to the insurance industry and those who run the CLE programs.
Insurance is meant to protect the insured's assets from exposure in the event of a loss. One should be able to choose not to purchase insurance, especially if they have no assets to protect. That is the right and privilege of each attorney and business owner based upon their own risk-tolerance.
Malpractice insurance is not primarily for the benefit of the client who uses the lawyer's services any more than homeowner's coverage is for the individual who gets hurt while visiting the homeowner's property. It is for the insured's benefit, to protect their assets from exposure in the event of something unforeseen. If an attorney is willing to put her assets on the line instead of purchasing insurance that should remain her right.
Each year, every lawyer in Connecticut pays $110 into the state Client Security Fund to compensate the victims of attorneys' criminal acts. The profession recognizes the need to protect those who may be harmed by the few bad apples.
Forcing an attorney to have malpractice insurance to protect those who would use his services, or forcing him to disclose that he doesn't have such coverage, will predominantly adversely impact new solo and small-firm lawyers, punishing them for a being new and financially tight. Instead of branding new uninsured attorneys with a Scarlet Letter, why not simply educate the consumer on the benefits of having a lawyer who is insured. If they are litigious, they'll seek out the insured attorneys, I promise.
As a profession, we already have certain protections in place to help the victims of malfeasance. Let the state Client Security Fund reimburse qualified victims. Let the Statewide Grievance Committee disbar irresponsible or criminal lawyers. Then let the criminal courts take it from there. •
Susan Cartier-Liebel is solo practitioner, adjunct professor at Quinnipiac University School of Law and a business consultant for solo and small firms. Her blog, Build A Solo Practice, is at susancartierliebel.typepad.com. She can be reached at SCartier_Liebel@comcast.net. Copyright © Susan Cartier-Liebel (2007) All Rights Reserved. No portion of this material may be copied, transmitted, posted, duplicated or otherwise used without the express written approval of Susan Cartier-Liebel.