Thursday, May 22, 2008
State Bar Approves Proposal for Malpractice Insurance Disclosure
By STEVEN M. ELLIS, Staff Writer
The State Bar Board of Governors has voted to adopt a proposal requiring direct client notification by attorneys who lack malpractice insurance.
The board voted 16-4 at its meeting on Friday to adopt the proposal, which would require California attorneys to make the disclosure to clients in writing at the time of engagement, and would also require attorneys to inform the State Bar whether they carry malpractice insurance.
It will now go to the California Supreme Court for further consideration.
The proposal represents a compromise from earlier versions the board had considered, in that an attorney will not be required to make the disclosure to a client if it is not reasonably foreseeable that the total amount of legal representation will exceed a total of four hours, the attorney is rendering legal services in an emergency to avoid foreseeable prejudice to a client, or the attorney has previously made the disclosure to that client.
As originally set forth, the proposal would also have mandated that uninsured attorneys be identified on the State Bar website, but that idea was shelved last year after then-President Sheldon H. Sloan cast the tie-breaking vote to defeat it, 9-8, at the board’s Sept. 26 meeting.
The the board othen pted to concentrate solely on the client disclosure aspect, and members such as John J. Dutton proposed linking it to fee agreements on the grounds that the proposal raised compliance problems for attorneys giving advice in a “cocktail party” situation and over the phone, including those staffing hotlines for victims of last year’s wildfires.
Over the concerns of some members, including President Jeffrey L. Bleich, who argued that linking disclosure to fee agreements would import further exceptions from the fee agreement requirement into the disclosure context, the board amended the proposal to its current form at its Nov. 9 meeting, and sent the revised proposal to its Regulation, Admissions, and Discipline Oversight Committee to seek further public comment.
The revised proposal—like the initial proposal—would not apply to attorneys employed as a government lawyer or in-house counsel when representing or providing legal advice to a client in that capacity, and had the support of all but one of the board members who represent Los Angeles County.
Board Member Michael D. Marcus of District Seven joined Members Danni R. Murphy, Carmen M. Ramirez and John E. Peterson to vote against it on Friday, while Members Richard A. Rubin and Paul A. Kramer Jr. were not present and did not vote.
Holly J. Fujie, who chairs the board’s Regulation, Admissions, and Discipline Oversight Committee, said that she voted in favor because the compromise represented a balance between the issues of public protection and bar members’ interests.
Rex Heinke agreed that the proposal represented a “compromise solution,” and commented that “probably everybody has portions that they would like to change.”
He said that he voted in favor because it was “in the interest of clients to have information about what malpractice insurance is available.
John P. McNicholas concurred, commenting that the board is “a consumer protection agency.”
Laura N. Chick said that, as a public member of the board, her charge was to be watching out for the public’s interest vis-à-vis legal services, and commented that, based on studies she had seen, “the overwhelming majority of the public wants to have this information and feels that it is important.”
However, Marcus, who works with dispute resolution services provider ADR Services Inc., said that he voted against the proposal because it lacked clarification in both its body and comments that it did not apply to mediators or arbitrators, who Marcus said do not have “clients” to whom disclosure would be mandated.
Bleich, who did not vote on the proposal because board members did not arrive at a tie, said that he nonetheless supported it, and commented that that he was both pleased by the process and satisfied by the results.
It is set forth in proposed new Rule 3-410 of the California Rules of Professional Conduct, and in proposed new Rules 9.6 and 9.7 of the California Rules of Court.
Copyright 2008, Metropolitan News Company