Mandatory malpractice insurance group to present findings

This is the third in a series of three articles regarding the potential for mandatory malpractice insurance in California. (Also see articles dated Sept. 28, 2018 and Oct. 26, 2018.) Recently, the Malpractice Insurance Working Group asked for public comment regarding the various topics that it is studying and is expected to make recommendations on to the State Senate Judiciary Committee and the chief justice of the California Supreme Court by the end of March 2019.

The public comment period closed on Nov. 5, 2018. The subcommittee studying the "advisability of mandating errors and omissions insurance for attorneys" (the Mandatory Insurance Subcommittee) met on Dec. 7, 2018, to make its final findings and recommendations, which will be presented to the Working Group committee on Jan. 14, 2019, at the State Bar's San Francisco office. Are we one step closer to mandatory malpractice insurance in California, or as Bruce Springsteen sang, are we one step closer and two steps back?

Before getting to the Mandatory Insurance Subcommittee's recommendations, something needs to be noted. Many California attorneys have not fully grasped the significance of the separation of the State Bar and the Sections (which are now in The California Lawyers Association). For instance, can you name the president of the State Bar? Of course not, as that is a trick question. There is no State Bar president anymore. Rather, there is a "chair" of the Board of Trustees of the State Bar.

Another question. As of Jan. 1, 2019, what will our State Bar dues be? Answer: $0. That was another trick question. As of Jan. 1, 2019, we won't pay State Bar "dues." Rather, we pay the State Bar a "licensing fee."

Is the State Bar a "guild" or a "trade association" tasked with advocating for and looking out for its members? If you said "yes", you are in for a rude awakening. Pursuant to the State Bar's mission, it is tasked with doing three things. They are:

• Licensing attorneys; disciplining attorneys and giving the State Bar exam;

• Protecting the public; and

• Ensuring and protecting access to justice

That's it. Now, it is true that in providing public comment in regard to whether there should be mandatory insurance, several attorneys noted that "insurance doesn't 'protect the public' from lawyers." They properly noted that insurance is designed to protect attorneys. Moreover, and more importantly, others noted that the State Bar's disciplinary system is designed to protect the public from attorneys.

Other attorneys noted that mandatory insurance would adversely impact the public's "access to justice." Many low-bono and pro-bono attorneys, who service those sectors of our community who have the least access to justice, indicated that they would have to stop practicing law if they were required to purchase insurance.

The vast bulk of those who provided public comment were against mandatory insurance (218 out of 306; or 71 percent). Unfortunately, their reasons for being against mandatory insurance did not focus on "why" mandating insurance wouldn't advance the State Bar's mission to "protect the public" and ensure "access to justice."

The following is a representative sample of some of the "reasons" that attorneys were against mandatory insurance:

(1) "Clients who really care about whether a lawyer has malpractice insurance are always free to ask";

(2) "Not all attorneys make a bunch of money. Requiring liability insurance for every attorney and every field of practice is overkill";

(3) "With these proposals, it is attorneys who will suffer";

(4) "The Bar should do an analysis to determine.....(if this) is in the best interests of the members of the State Bar";

(5) "We are attorneys and are entitled to be honored and trusted, not looked at as scoundrels";

(6) "We should be protected by the Bar";

(7) "Mandating insurance as a condition of licensing would be unduly burdensome to attorneys";

(8) "It's not the State Bar's (job) to protect every client out there......"; and

(9) "This requirement (mandating insurance) would be unaffordable to me and be unfair."

Do you see the problem with these comments? These might be valid complaints and concerns for the "old State Bar," but for the "new State Bar," without reference to "protecting the public" or "access to justice," such comments fall on deaf ears. That was no more apparent than at the Dec. 7 meeting of the Mandatory Insurance Subcommittee.

Four of the five members of this subcommittee of the Working Group (there are 17 members in the Working Group, divided into four subcommittees) appeared telephonically. They were discussing their final recommendations to be made at the upcoming Working Group meeting.

And here is how they voted. One member voted for a recommendation to adopt mandatory insurance as a condition of licensing. He argued that this should be adopted as a "matter of public policy" in order to protect the public. It didn't matter to him whether there were 20,000 uninsured lawyers or just one uninsured lawyer in California. To him, if there is only one uninsured attorney, the public isn't being protected.

Two members voted for mandatory insurance, but with delayed implementation pending further study. For instance, there needs to be further study on:

The mandatory minimum: Should the minimum mandatory policy be a $100,000, $300,000 or $500,000 policy, or something else?

Big firm issue: If every solo attorney is required to purchase a policy, then what about the large firms? Should each and every attorney in a big firm have an individual policy or should the big firms get away with just being able to purchase a "global policy" that covers the whole firm, of say 500 attorneys?

Exemptions: Will there be any? A review of public comments reveals requests for approximately 25 different exemptions (such as judges, government lawyers, mediators, arbitrators, low-bono attorneys, pro-bono attorneys, etc.).

On this last point, there was debate as to whether, ultimately, there should be any exemptions at all. Analogy was drawn to the new rule requiring all attorneys to deposit advanced fees into their client trust account, no exceptions. Many different practice areas requested exemption from this rule. So many, that if granted, the "exceptions would swallow the rule." As such, a blanket "no exemptions" policy was put in place.

Finally, one attorney on the subcommittee was a self-acknowledged "fence sitter," and recommended further study and collection of data prior to any final decision.

Would these recommendations by the subcommittee have been different had attorneys focused their public comments on how mandatory insurance would not "protect the public" and would negatively impact "access to justice"? We don't know.

We do know, however, that if you believe that might have been the case, you can say so, at the public comments portion of the next Malpractice Insurance Working meeting, scheduled for 10 a.m. to 4 p.m. on Jan. 14, 2019, at the State Bar's San Francisco offices, located at 180 Howard Street.