So, this is an issue that states continue to “struggle” with from time to time, and the latest I am aware of is Vermont. Michael Kennedy has alerted the public to a pending proposal in Vermont that is now out for public comment that would require Vermont lawyers to disclose on their annual registration statements whether they have or do not have malpractice insurance.
The problems I have with all of these kinds of proposals, including ones that go further and require lawyers to actually have malpractice insurance, are the focus of today’s post.
But, first, just to be clear, I obviously recognize that ideally all lawyers everywhere would recognize that having malpractice insurance is better than not having malpractice insurance and that there are likely far too many lawyers practicing who do not have any malpractice insurance. Also, I want to admit that — while almost all of the information is anecdotal – I have no doubt that most consumers of legal services just blithely assume that the lawyers that they retain actually have some form of insurance coverage.
While all of that is true, I have a strong opinions that trying to regulate and require it in the ways that states have tended to do is not a helpful approach to the issue and, particularly when all that is sought to be required is disclosure of coverage vel non, can actually end up hurting rather than helping consumers.
Here’s why I say that. Given that the predominant nature of lawyers’ professional liability insurance is that it is issued on a “claims made and reported” basis, I don’t think that making available to a consumer information about whether, during a discrete window in time, a lawyer has an available insurance policy actually provides useful information. The notion that a lawyer may have had coverage at a particular date in the past does not give any clear reason to believe that the lawyer has a policy in place for a time frame that is relevant to when an act or omission might have occurred nor whether it covers any particular conduct nor any information about whether the attorney has provided timely notice to make sure not to lose coverage for the particular set of circumstances. And, if we assume the consumers will make decisions about whether to hire a lawyer based on whether or not they might have insurance that could help pay for any mistakes, the disclosure could well be unhelpfully misleading.
Here is the moment where I admit that I am now hopelessly old, forgetful, and sadly self-referential. I just spent some time trying to find someone that had eloquently made the point more clearly about how this kind of requirement could be counterproductive and even misleading. In so doing, I found … I’ve already done this and forgot. Sigh. So, here’s a link to that post from what is now almost 7 years ago.
Admittedly, actually requiring lawyers to obtain and have in place malpractice insurance is not a failsafe solution either, but if the concerns expressed by the jurisdictions that require notice of status are really to be addressed, it is a remedy that comes significantly closer to addressing the concern than does merely requiring notice of status at a given snapshot moment in time.