Letter to the Office of Research and Institutional Accountability, The State Bar of California

November 9, 2018

Linda Katz
Principal Program Analyst
Office of Research and Institutional Accountability The State Bar of California

180 Howard St.
San Francisco, CA 94105

Re: Public Comment – Legal Malpractice Insurance Study

Dear Ms. Katz:

The Executive Committees of the Solo and Small Firm Section (“SSF”) and the Workers’ Compensation Section (“WC”) of the California Lawyers Association jointly submit these comments in response to the request for public comment on the statutorily mandated review and study being conducted by the State Bar’s Malpractice Insurance Working Group. These comments are submitted on behalf of SSF and WC only, and not on behalf of the California Lawyers Association as a whole.

Our comments are focused on the portion of the working group’s study that is considering the advisability of mandating malpractice insurance for attorneys licensed in California. We are not aware of any crisis inside the legal profession justifying any change to the status quo. To our knowledge, there has been no substantial increase in uncovered malpractice claims, no degradation in the general standard of competence, nor any other factors that would warrant revisiting mandatory malpractice insurance. Thus, although we recognize the potential difficulty of obtaining empirical evidence to support a proposed change, we believe across-the-board mandatory malpractice insurance cannot be justified by any evidence establishing the need.

We note that different areas of legal practice involve different risks. Many areas of practice do not involve significant malpractice risk, while other areas might. If there is an issue with a particular area of the law, the focus should be on identifying the root cause of the problem, rather than advocating in favor of a blanket requirement for malpractice insurance.

A large number of attorneys in California are solo and small firm practitioners. Solo and small firm practitioners come in various forms and sizes of practices, including very small niche practices and extremely part-time practices. A mandatory malpractice insurance requirement would disproportionately impact the smaller practices (though admittedly insurance is cheaper for smaller and part-time firms). There is often no particular need for these practices to be insured, as some practice areas have virtually no exposure.

Mandatory malpractice insurance also raises the question of whether minimum coverage amounts would be required. Without minimum coverage, the mandatory nature of insurance may become almost meaningless. At the same time, minimum coverage cannot rationally be determined across the industry as a whole. Every practice area, and in fact every individual practice, has vastly different factors that would need to go into the calculation of what coverage (if any) is appropriate.

We also note that some members of our Sections have retired after many years of private practice and do not carry malpractice insurance except as a “tail” on their prior years of practice. Some of these attorneys have retained their active status with the State Bar so they can continue doing volunteer and pro bono legal work. These members report that a requirement to obtain malpractice insurance would be an unwarranted expense, given the work being performed.

Finally, SSF and WC strongly support protection of the public but believe mandatory malpractice insurance is not necessary to protect the public. Attorneys are presently required to disclose if they do not carry malpractice insurance, so the public is already warned if an attorney is uninsured. The choice is the client’s to make as to whether to employ the uninsured attorney. If there is a real problem for a particular practice area, the market will ultimately force the attorney to become insured. There is no reason to take this market force out of play and mandate malpractice coverage for all attorneys.

We appreciate your consideration of these comments. If you have any questions or would like to discuss this matter further, please feel free to contact Renee N. G. Stackhouse at (760) 224-5226 or Renee@StackhouseAPC.com; or Maria Sager at (510) 286-2912 or msager@boxerlaw.com.

Sincerely,
/s/
Renee N. G. Stackhouse, Chair
Executive Committee, Solo and Small Firm Section
/s/
Maria Sager, Chair
Executive Committee, Workers’ Compensation Section