NW Lawyer - August 2018

careful scrutiny. A survey of New Mexico uninsured lawyers revealed that less than 18 percent performed any pro bono work. 9 Oregon, which has mandatory insurance, has relatively high rates of pro bono participation. 10 A survey of Nevada uninsured lawyers revealed that none indicated that the fact that they represent clients pro bono was the primary reason they were uninsured. 11

The WSBA’s Task Force on Mandatory Malpractice Insurance has tentatively concluded it will exempt from an insurance requirement lawyers providing services through nonprofit entities, including pro bono services. 12

The claim that those who do low
bono work would have to raise their
rates also seems somewhat overstated.
Assuming that LPL insurance costs

$3,000 annually in Washington— which is a high estimate13—lawyers would be required to charge approximately $10 more per day to pay for their LPL insurance.

Yet another argument against an insurance requirement is that it will make lawyers a “target” of lawsuits. If lawyers mean that they can avoid legitimate suits—because other lawyers will not sue them—this is a cynical reason for opposing an insurance requirement. If they are referring to frivolous suits, this is harder to assess. One does not hear about a problem with frivolous malpractice lawsuits against insured lawyers comparable to the claim in the medical malpractice context. In fact, legal malpractice can be very difficult to prove because of the case-within-a-case issue and other challenges. Experienced plaintiffs' malpractice lawyers do not like to take cases if causation is not clear. 14

At worst, it may be that uninsured
lawyers who are required to carry
insurance will be sued because it will
be possible for their former clients to
find representation—but it would not
be unfair to lawyers if their clients
were better equipped to recover on
their claims.

Of course, an LPL insurance requirement does not guarantee full redress for all clients. Minimum insurance requirements may not fully compensate those who are harmed. But the average payment made by LPL insurers for claims against solo and small-firm lawyers appears to be well under $100,000.15 So even relatively low coverage limits would cover most claims.

There are also advantages to carrying LPL insurance that are sometimes overlooked in this debate. The mere process of annually reapplying for coverage reminds lawyers to consider the adequacy of their calendaring, conflicts-checking, and other systems. Insurers offer their insured lawyers free CLE and other risk management materials. They also have hotlines and other means by which lawyers can ask questions in order to avoid malpractice claims.

WHY CHANGE THE STATUS QUO?

One might ask why Washington’s insurance disclosure rule is not sufficient to protect the public. That rule requires lawyers to report to the WSBA whether they carry insurance, and that information is posted on the WSBA website. One problem, however, is that the public believes all lawyers are insured. 16 Consequently, they do not think to look for information indicating whether a lawyer carries insurance.

Moreover, even if clients find this information, they do not understand the implications. The public generally thinks that lawyers are well-off and can afford to pay judgments against them.

The WSBA website on insurance
promotes this view: it states that not
all lawyers maintain LPL insurance
and that some do not because “the
lawyer may choose to be financially
responsible (self-insured).” 17 This
statement fails to alert the public that
some uninsured lawyers may not be
financially responsible. Nor does it
explain that they may be unable to
find another lawyer to represent them
if they wish to bring a malpractice
action against an uninsured lawyer.
When debating the issue of an
insurance requirement, it is useful to
remember that many lawyers decline
to purchase insurance because they
simply prefer not to. They think
they work in low-risk practices.
(Sometimes they are mistaken.)
They think they are good lawyers.
(Don’t we all?) They dislike insurance
companies. (Ditto.) At the same time,
the empirical evidence cannot rule
out the possibility that there may be
a few lawyers who genuinely cannot
afford LPL insurance if it is required.
However, that number appears to be
quite small.

Ultimately, the question the WSBA faces comes down to who should bear the risk of loss when a lawyer makes a mistake: the lawyer or the public? It’s time for Washington lawyers to answer that question. NWL

NOTES

1. See, e.g., Herbert M. Kritzer & Neil Vidmar, When Lawyers Screw Up: Improving Access to Justice for Legal Malpractice Victims (2018); Leslie C. Levin, Lawyers Going Bare and Clients Going Blind, 68 Fla. L. Rev. 1281 (2016).

2. Kritzer & Vidmar, supra note 1, at 171. The cost of insurance in the Canadian provinces varies, ranging as high as CDN $3,900 in Alberta. See James Careless, Professional Liability Insurance: Not Just an Unwelcome Expense for New Lawyers, CBA PRACTICELINK, Jan. 13, 2016, https://www.cba.org/Publica-tions-Resources/CBA-Practice-Link/ Young-Lawyers/2016/insurance. In U.S. dollars, that comes to $2,960.