Mandatory Legal Malpractice Insurance: the Solution or a New Problem?
| Publication year | 1985 |
| Pages | 1795 |
1985, October, Pg. 1795. Mandatory Legal Malpractice Insurance: The Solution or a New Problem?
Statistics kept by the Colorado Supreme Court reveal that there were 13,314 registered Colorado attorneys at the end of the 1984 calendar year. Of the number of registered attorneys, 11,610 were active. The active registered attorneys may be categorized as follows: private practice (8,393); in-house counsel (838); government attorneys (1,030); judges, including out-of-state active judges (296); judge advocates (24); and other categories [e.g., trust officers (1,029)].
A survey of the major legal malpractice insurer representatives which are marketing legal malpractice insurance in Colorado provided meaningful information concerning the number of Colorado attorneys carrying legal malpractice insurance. Pacific Employers (INA-PRO) has approximately 2,950 Colorado insureds; Home (PLUM), approximately 2,200; C.N.A., about 200; American Home, about 2,250; and General Accident (Shand Morahan), around 150 insureds. Miscellaneous carriers, including carriers through Lloyds of London, insure approximately 400 Colorado attorneys. The sum total of Colorado insureds is around 8,175.
Assuming that insurance carriers' representatives have been candid concerning the number of insureds to whom they have issued policies, the percentage of active registered attorneys in private practice insured in Colorado would be 97.4 percent. This presumes that active registered attorneys in private practice would comprise the Colorado insureds. Even if a 7 percent error in the numbers is assumed, over 90 percent of Colorado lawyers would be insured. This indicates that the vast majority of Colorado lawyers are aware of their responsibilities to the public to carry insurance in case of negligent acts or omissions.
None would deny that attorneys generally are independent thinkers who can conjure an infinite number of arguments, questions and concerns about most issues. The issues related to obligatory legal malpractice insurance and the creation of a fidelity and liability fund are no exceptions to the rule. Among the issues and questions to be considered are the following:
1. Do lawyers have a moral or ethical obligation to serve as insurance companies for their clients and, if so, in what amounts?
2. Should lawyers obligate themselves to do that which other professions do not require their members to do---insure against their mistakes?
3. Are there alternatives to protecting the public other than obligatory legal malpractice insurance? Such alternatives may include a recovery fund funded by a yearly assessment of all licensed attorneys; a financial responsibility act whereby an attorney would be required to show evidence of insurance or post a bond sufficient either to cover any legal malpractice claim asserted against him or to demonstrate that no legal malpractice had been committed; mandatory disclosure to clients of uninsured status; or a requirement that two of the forty-five hours of mandatory continuing legal education be required to be in the area of avoidance of administrative and clerical errors in the office.
4. Is there a real danger to the public of numerous or substantial claims being asserted against uninsured attorneys? Only approximately 3 percent of the active private practitioners in Colorado are uninsured and most legal malpractice claims are resolved without payment of any amount to the claimant. Where payment is made, according to the 1982/1983 statistics, 90 percent of the payments are under $50,000 and approximately 70 percent of the payments are under $25,000.
5. Is the underinsured lawyer a concern in addition to the uninsured lawyer?
6. How would mandatory coverage be monitored to make sure all private practitioners are covered?
7. Should existing lawyers with no claim record or history be grandfathered so that legal malpractice insurance coverage would not be mandatory for them?
8. Should any classes of lawyers be excluded from a mandatory plan, such as public defenders, district attorneys, non-practitioners or house counsel?
This month's column was written by A. Craig Fleishman, Column Editor and partner in the firm of Haligman, Zall and Lottner, P.C.
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