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February 27, 2007

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.

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Comments

Chuck Newton

I do not necessarily agree. First, most malpractice policies would not pay for an intentional criminal act. But, even if they did, the truth of the matter is that lawyers make mistakes. Sometimes they are innocent mistakes. Sometimes because they are pre-occupied with other things or personal events. But, these mistakes harm honest people. If these clients are harmed, they need to be compensated. Personally, I do not want the grievence committees to do this. They do not operate well in any event. Also, they have a different standard. The market needs to be self regulating. The problem is that self regulation is a farce if you have a bunch of judgment proof attorneys running around. I do not think the insurance coverage needs to be extrordinarily high, and the state should make it available cheaply to those who have trouble otherwise. But, you have to have minimum insurance to drive a car in case you have an unintended accident. Doctors typically have to have minium coverage to get hospital privileges. I see this as the best possible solution. The Bar gets out of this business and requires reasonable amount of insurance.

Hans Poppe

I could not disagree more, attorneys are charged with the responsibility of protecting our clients. we do them an injustice when we fail to protect them from our own malpractice. Read more about this topic at my blog: http://www.poppelawfirm.com/blog/index.cfm?id=568

Susan Cartier Liebel

Hans,

For clarification, although it is in the body of the post, the catalyst for this column was previous commentary by the Connecticut Law Tribune Advisory Counsel stating a way to curb attorney malfeasance (client theft) is to mandate malpractice insurance. If a lawyer steals your money that's a criminal act. We have systems in place in Connecticut to protect clients from attorneys' criminal acts. Therefore, mandating malpractice insurance for an act not generally covered by malpractice insurers doesn't make sense if the premise is to protect against a criminal act. And in Connecticut if there is any malpractice on the part of the attorney and that attorney has no assets to attach, the Client Security Fund will compensate the victims. Mandating insurance doesn't curb criminal behavior. Therefore, unjustly penalizing new attorneys is uneccessary. Is practicing law a privilege, of course. Should we be complacent about too much intrusion in our professional lives when exercising our privileges? No. We should be very vocal, especially when it is an illogical argument being put forth.

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