CBJ - June 2008 #03. Finally, board approves an insurance disclosure rule.


California Bar Journal


CBJ - June 2008 #03.

Finally, board approves an insurance disclosure rule

California Bar JournalJune 2008Finally, board approves an insurance disclosure ruleThe State Bar Board of Governors finally adopted a proposal last month that will require attorneys to tell their clients if they do not carry malpractice insurance. Sometimes.

By a vote of 16-4, the board accepted a compromise rule of professional conduct that a lawyer who does not carry professional liability insurance must disclose that to a client (a) in writing, (b) at the time of engagement and (c) if the representation exceeds four hours.

The recommendation now goes to the California Supreme Court for approval.

"This proposal should not be troubling to the board," said bar President Jeff Bleich, adding that the "parade of horribles" suggested by opponents to disclosure has not happened in any state with more aggressive policies.

But John Peterson, a governor from Fresno who favors both a disclosure requirement and posting a lawyer's insurance status on the bar's Web site, described the proposed rule as "an unnecessary irritant to the attorney-client relationship."

And to board members who described the compromise as a half loaf that was better than nothing, he retorted that a "moldy half loaf" was not acceptable.

The vote ended a three-year process that began with the 2005 appointment by former bar President John Van de Kamp of an insurance task force. After a year of study and a round of public comment, the task force proposed both a rule of professional conduct that would require disclosure to clients and a rule of court mandating disclosure to the bar.

Opponents, mostly small firm and solo attorneys led by Chico Governor John Dutton, said the disclosure requirement would affect them disproportionately, stigmatize those who do not carry insurance and ultimately reduce the availability of low-cost or pro bono services to clients who cannot afford to hire a lawyer.

More revisions led to a second and then a third round of public comment. As public member George Davis noted at last month's discussion, "We've beat this to death."

Supporters of a disclosure requirement believe it enhances public protection and is material to a potential client's decision in hiring a lawyer.

James Penrod, a governor from San Francisco who has litigated...

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