A Bigger Burden: Mandatory Malpractice Insurance Disclosure: Who Benefits?

Published in Legal Management, November/December 2006

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Fifteen years ago, in my home state of California, I testified against a mandatory continuing legal education (MCLE) requirement. I argued that good lawyers already do the right thing, that inept lawyers never will, and that sole and small-firm practitioners would be burdened by expenses they cannot pass on to consumers. Under the guise of "protecting the public," the MCLE proposal passed.

Time, however, has proven me right. Disciplinary and malpractice claims have continued to rise, individuals and organizations that provide training programs have financially profited (including at least one bar association that went from near bankruptcy to a $1 million surplus), and sole and small-firm practitioners have borne unnecessary expenses imposed by an organization that purports to represent them.

Well, as the saying goes, "it's déjà vu all over again." In June, The State Bar of California approved a resolution for and sought public comment on a new Rule of Professional Conduct that requires each California lawyer to disclose at the start of an engagement, and for the state bar Web site to disclose generally, whether the lawyer has malpractice insurance coverage. Law firm administrators and executive directors should be aware that this represents a nationwide effort, at the urging of the American Bar Association, which now has enlisted nearly one-third of all U.S. states (although some have resisted). It will be a greater burden on all but the megafirms, just as MCLE has been. It also raises troubling questions about what bar associations are really trying to accomplish – and for whom.

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