Thursday, September 27, 2007
State Bar Board of Governors Rejects Insurance Disclosure Proposal
Issue Set to Be Revisited in November After Sheldon Sloan’s ‘No’ Vote Breaks Tie
By STEVEN M. ELLIS, Staff Writer
The State Bar Board of Governors yesterday rejected rules that would have required California attorneys to disclose to clients and to the State Bar if they do not have malpractice insurance, and would have mandated that the State Bar identify uninsured attorneys on its Web site.
Saying that requiring that such information be posted on the Internet was “over the top,” President Sheldon H. Sloan cast the tie-breaking vote against the proposal, which was defeated by a vote of nine to eight.
The proposal would have amended the California Rules of Professional Conduct and the California Rules of Court.
Board members William Gailey, Jeffrey L. Bleich, Matthew Butler, George Davis, Jeannine English, James N. Penrod, John E. Peterson and James Scharf voted in favor of the proposal. Laura N. Chick, John J. Dutton, Richard A. Frankel, Holly J. Fujie, Jo-Ann Grace, Howard Miller, Danni R. Murphy, and Carmen M. Ramirez voted against it.
The board split on adoption of the proposal after debating the issue and hearing testimony from a number of supporters and opponents. Although the board agreed that everyone was in favor of client protection, individual members disagreed on whether the proposal, or a broad mandate requiring all attorneys to obtain insurance provided by companies at an affordable level, was the best manner in which to proceed.
Supporters of the proposal framed the issue as a matter of client protection, while opponents such as Dutton pointed to the lack of empirical evidence supporting a need for the proposal.
Dutton also noted the impact on small and solo practitioners, and said that many other facts that were of equal importance to clients would not be disclosed under the proposal.
“If insurance disclosure is so important,” he asked, “why shouldn’t we disclose the amount of coverage and the ramifications so a client is fully informed?”
Penrod said out that although public comments on the proposal were overwhelmingly against it, the board never asked non-attorneys’ positions on whether they wanted to know if attorneys are insured.
Countering an argument that the proposal really benefited insurance companies and not the public, he pointed to the parallels between the measure and automobile and life insurance and said that insurance served two purposes: to protect the insured from ramifications of his or her conduct, and to protect the public from such ramifications as well.
Non-members of the board who offered testimony were passionate in pleading their case.
Attorney Ed Pohl argued that the proposal did not really protect the public, and called it a “slap in the face to the majority of members who are not represented here.”
Claiming that the proposal would force attorneys who could not afford malpractice insurance to leave the practice or to become second-class citizens, he asked, “why don’t you give them a yellow armband?”
Diane Karpman, who represents attorneys in disciplinary cases, agreed, saying that the proposal would also allow insurance companies to regulate the conduct of attorneys and inflate fees to the point that lower-income individuals would be deprived of access to justice.
Supporters offered testimony that knowing whether an attorney had malpractice insurance was material to an individual’s determination to hire an attorney, and that clients should have access to such information. They argued that protecting clients who may be hurt by an attorney’s mistake is really attorney protection, and that the measure would ultimately protect insured attorneys who may become the target of lawsuits by clients of uninsured attorneys with whom they are only tangentially related.
After the proposal was defeated, Scharf attempted to address Sloan’s concerns by moving to delete the language requiring the bar to post information on the website. However, the board was unable to agree on what effect this would have on disclosure of this information by the bar upon a specific inquiry by individuals, and ultimately voted to table the issue until its next meeting in November.
Copyright 2007, Metropolitan News Company