Legal Malpractice Insurance

The Los Angeles Times reports yesterday on the debate in California about whether California lawyers should be required to tell their clients whether they carry malpractice insurance. Apparently, 20% of the state’s 150,000 lawyers do not have legal malpractice coverage. (Can you believe California has 150,000 lawyers? Exactly where do they hold their annual bar convention? I’m a lawyer and I find this disturbing. Let’s just move on….)

The question is not whether California lawyers are required to get legal malpractice insurance; instead it is whether lawyers must disclose whether they have legal malpractice insurance. Opponents of the rule argue that because clients will likely not want a lawyer who discloses that they do not have legal malpractice insurance, this will effectively force all lawyers to buy legal malpractice insurance.

I’m sure this is true. But if virtually every client would prefer a lawyer with legal malpractice insurance, shouldn’t all lawyers have legal malpractice insurance?

The American Bar Association has adopted a model insurance disclosure rule and 20 states now have some sort of disclosure rule. I think having to disclose this fact to a client is unbelievably awkward. I think a better rule would be requiring legal malpractice insurance, at least for lawyers handling they types of cases that often lend themselves to legal malpractice claims, such as real estate lawyers and personal injury lawyers.