Friday, December 14, 2007
Panel Votes to Allow Comment on Insurance Disclosure Rule
By STEVEN M. ELLIS, Staff Writer
A State Bar committee yesterday voted to open a 90-day public comment period on a revised rule generally requiring lawyers who lack malpractice insurance to inform their clients of that fact.
The Board of Governors Committee on Regulation, Admissions and Discipline (“RAD”) also voted to send proposed changes to the State Bar’s Alternative Discipline Program to the public for comment, and to forward a report on whether to regulate nonprofit legal entities in light of the Supreme Court’s decision in Frye v. Tenderloin Housing Clinic, Inc. (2006) 38 Cal. 4th 23 to the full board for consideration on whether to forward the report to the court.
The Board of Governors had previously referred Proposed Rule 3-410 of the California Rules of Professional Conduct with respect to insurance disclosure to the committee after voting last month to link the disclosure requirement to the written fee agreement requirements in Business and Professions Code Secs. 6147 and 6148.
A RAD subcommittee made up of John J. Dutton, William N. Hebert, Rex Heinke, and RAD Chair Holly Fujie subsequently revised the proposal to limit the need for disclosure to situations where it was reasonably foreseeable that the representation would exceed four hours. They also expanded an exception for government lawyers or in-house counsel when acting in that capacity, and provided that the rule would not apply to legal services rendered in an emergency.
Dutton told the committee that, even though he was against the disclosure requirement in general, the revised rule represented a compromise in order to “put the issue to bed.”
Dutton, Hebert, Heinke and Michael D. Marcus voted in favor of sending the proposed rule for public comment; George Davis, William H. Gailey and John E. Peterson voted against. Jeannine English was not present at the meeting.
The committee also voted to adopt two resolutions regarding insurance disclosure that would recommend that the State Bar study methods of making liability insurance more available and assess the effect of any new insurance disclosure rule after it becomes effective.
A third resolution recommending that the State Bar develop public educational material concerning professional liability insurance to complement the proposed rule failed to gain enough support to reach a vote.
Peterson moved that the committee adopt a proposal the Board of Governors had previously rejected in its Sept. 26 meeting that would require attorneys to disclose to the State Bar if they do not have insurance, and mandate that the bar identify uninsured attorneys on its Web site. However, after strong objection by Dutton, the measure was voted down.
Earlier in the meeting, the committee voted unanimously to release to the public for a 90-day comment period proposed amendments to the Rules of Procedure that would modify the operation of the bar’s Alternative Discipline Program.
The program is a comprehensive program for addressing the identification, assessment and treatment of substance abuse and mental health problems of respondents in the discipline process. It was designed to protect the public, the courts and the legal profession, while allowing respondents with substance abuse or mental health problems to receive treatment.
Senior Supreme Court staff advised State Bar President Jeffrey L. Bleich, Fujie, State Bar Court Presiding Judge JoAnn Remke, State Bar Executive Director Judy Johnson and selected members of the bar’s senior executive team in an Oct. 16 meeting that the court had concerns about the program’s current operation and procedures. Pursuant to an agreement reached during that meeting, Remke and State Bar Court Chief Trial Counsel Scott Drexler later met and agreed upon proposed modifications to address the Supreme Court’s concerns, although Remke did not endorse the changes.
The modifications would:
•Establish guidelines and limitations regarding attorney eligibility for the program;
•Require that stipulations as to facts or conclusions of law be agreed upon and executed within 120 days of an attorney’s referral to the program;
•Presume that an attorney who receives a suspension of 90 days or more upon successfully completing the program be inactively enrolled unless the State Bar Court specifically concludes that the attorney may continue to practice without danger to clients or the public;
•Require the attorney to establish a nexus between substance abuse or a mental health problem and the admitted misconduct by clear and convincing evidence;
•Provide for de novo review of the State Bar Court’s decision to admit or deny participation in the program, and of decisions regarding termination from the program;
•Make stipulations as to facts or conclusions of law public upon approval of the stipulation by the State Bar Court and admittance of the attorney into the program;
•Release an attorney from the program if new allegations of contemporaneous misconduct cannot be incorporated into the proceeding, but bind parties to previously agreed upon stipulations; and
•Provide that the judge who presides over a matter and receives confidential information about an attorney may not handle the matter if it returns as a standard disciplinary proceeding in the event the attorney has been terminated from the program.
Drexler rejected criticism by opponents of the proposed modifications that they were prevented from giving input, noting that members of the attorney discipline defense bar met with senior Supreme Court staff, and representatives of his office and the State Bar Court on three occasions to discuss the proposed changes.
Before concluding the open portion of its meeting, the committee also voted unanimously to send a subcommittee’s report to the Board of Governors concluding that new regulations on nonprofit legal entities are not justified in light of the Supreme Court’s decision in Frye.
There, the court ruled that nonprofit public benefit corporations, such as legal aid societies, public interest advocacy organizations and mutual benefit entities, who provide legal services to the public are not bound by existing state statutes and rules governing for-profit professional corporations and limited liability partnerships who engage in the practice of law in California. Recognizing that it had authority to impose registration, certification and other requirements if it determined that they were necessary to fulfill its responsibility to regulate the practice of law, the court requested that the bar conduct a study and report back whether enhanced regulation was warranted.
A RAD subcommittee concluded that no evidence suggested that nonprofit corporations actually imperil client interests, and that changing the exemption that nonprofit legal entities enjoy from public protection standards established for other practice contexts was not justified. The report refrained from recommending that the court implement any new regulations, and said that the State Bar should recommend, at most, that nonprofit law corporations be required to register as such with the bar.
Copyright 2007, Metropolitan News Company