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April 09, 2008

Solos Should Not Be Mandated to Have Malpractice Insurance..nor Disclose They Don't

Ed Poll of LawBizManagement and I share concerns about mandatory malpractice insurance as well as mandatory disclosure if you do not have malpractice insurance as it will disproportionately hurt the solo practitioner as well as the public the mandate purports to protect.  You can read his passionate post here as it relates to the ongoing debate in California.

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?

In addition, Ed takes on the assertions made by the head of the California Bar Association, Bleich, that their mission is solely to address the needs of the public.  When Bleich 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 ...”

Ed responds:

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 this been reversed? Seems to be ... especially if we believe that helping lawyers is only a means to an end, not a co-equal end!

This is a raging debate and may be rearing its ugly head in your state.  Pay attention.

You can read my take on mandatory malpractice insurance here.


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Chuck Newton

I am not sure I agree with this, but I will think about it. The truth of the matter is that sometimes lawyers, although they do not mean to, hurt clients in ways that cannot be easily remedied. Missing a statute of limitation date, for example. Should there not be a remedy for the aggrieved client? I do not think it means the lawyer is a bad person, but sometimes things just happen. If there is no insurance, then there is typically not a satisfactory remedy. Also, the problem of no insurance is that the Bar has a tendency to get involved, and Bar rules are not really set up to handle these matters effectively. The Bar wants to discipline, and that is not really the strategy that ought to be follow on these issues.

Susan Cartier Liebel

Chuck, every year I am mandated to pay $110 into a state sponsored client security fund precisely to cover such losses to clients who otherwise would have no redress for exactly situations like you describe.

In addition, if a client sues you and you have malpractice insurance, the insurance company is going to vigorously defend you to avoid paying out to the aggrieved client, right? The client isn't really served by mandating malpractice insurance.

And no malpractice lawyer is really going to take on a case where the defendant lawyer doesn't have malpractice insurance because there is no guarantee she is going to get paid. It's a business decision.

So, follow the money...mandate insurance, the insurance company gets money yearly, the lawyer gets money if their is a winnable malpractice claim and may even be encouraged to take on a questionable case for the potential of profit.

No insurance, no lawyer. But there is a client security fund if the claim is legitimate. The client is protected. Just the insurance company and plaintiff's lawyer don't make money.

If I sound cynical it's because I'm tired of this mantra of protect the public from the nasty lawyers when the end result is just further enrichment of the insurance companies.

If there is a mistake, the client is covered with the client security fund. Just no one else profits off the mistake. End of story.

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