Calif. Bar Still Wants Insurance Disclosure Rule
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Reprints & PermissionsAfter California Bar leaders announced last year that they might require lawyers to tell clients if they don't carry malpractice insurance, complaints began pouring in.
Some attorneys said the financial costs could drive them out of business. Others worried about encouraging malpractice suits by their own clients. And many felt attorneys who disclose a lack of insurance would be unfairly branded as less professional.
As it turns out, their concerns were heard, but they might not like the results.
Members of the State Bar's Insurance Disclosure Task Force intend to recommend Friday that the proposal be tweaked to address some smaller complaints, but they're not backing off their belief that disclosure is the right way to go.
"What the task force has done won't cause opponents to change their minds," its chairman, James Towery, said Friday. "We understand that. But we want them to know that the task force has been listening and has made some changes that make the proposal better."
The goal all along, he said, has been "client protection, not simply what's in lawyers' best interests."
Critics are already speaking out, calling the proposed revisions -- which mostly make wording changes or delete some smaller obligations -- purely cosmetic.
"This commission has decided the tactic it's going to follow," said Diane Karpman, a Los Angeles lawyer who represents attorneys facing State Bar discipline, "and isn't interested in anyone else's position."
State Bar officials estimate that at least 20 percent of California's 156,000 active lawyers are uninsured.
The seven revisions in the proposal came in response to 112 written comments received by the task force in the last several months. More than 78 percent of the comments opposed mandatory disclosure.
On Friday, Towery intends to ask the State Bar Board of Governors' Committee on Regulation, Admissions and Discipline Oversight to send the revisions out for 30 days of public comment. The board of governors itself will have the final say over whether the entire idea is eventually adopted.
In documents prepared for the teleconference meeting, the task force noted it had "fully considered" comments already received, but concluded "that the important goal of client protection would be advanced by an insurance disclosure requirement, and that this goal outweighed" any concerns.
The most substantial revisions would make disclosure apply only to future clients, delete a provision requiring clients to provide signed acknowledgements, and insist on disclosure only when attorneys actually represent or provide legal advice to clients.
The only proposal to intrigue opponents asks the State Bar to look into making malpractice insurance more affordable for attorneys. Critics have noted that some states, including neighboring Oregon, mandate malpractice insurance, but make sure the costs aren't stratospheric.
Edward Poll, a former solo practitioner who runs a lawyer-consulting business in Venice, said Friday that affordability should go hand-in-hand with any disclosure requirement.
"That was the point I was making [last year]," he said. "I wasn't objecting by itself to the disclosure issue, but to its isolation from economic reality."
Insurance disclosure isn't a new idea. The state Legislature passed a bill in 1992 that required disclosure by attorneys, but the Consumer Attorneys of California succeeded in getting the law repealed in 2000.
The idea was revived by the State Bar partly because there were concerns that clients had little or no recourse for attorneys' negligence -- such as missing a critical filing date -- that ruins their cases.
A lack of malpractice insurance, Towery said, "is a material fact that prospective clients have the right to know."
That fact, though, hasn't stemmed the tide of criticism.
State Bar documents show that negative comments came from most corners -- solos, small-firm lawyers, in-house counsel, appellate lawyers and even from the chairman of the Los Angeles County Bar Association's ethics committee.
Last fall, the Conference of Delegates of California Bar Associations -- an independent group composed of lawyers from all around the state -- voted overwhelmingly to urge the State Bar to drop the idea.
State Bar governor James Scharf, chairman of the committee that will discuss sending the proposals out for comment Friday, said the negative reaction didn't surprise him. He also admitted he's "still keeping an open mind" about whether disclosure is appropriate.
"We haven't actually debated the issue," he said, "and I think it would be a mistake for me to state an opinion before hearing all of the evidence."
However, Scharf said he believes the concept has merit.
"Our ultimate mission is to protect the public," he said. "We're not really meant to be a trade organization, and I would think the public -- in deciding who to retain -- should have information that helps them make good decisions."
