Task Force on Mandatory Insurance Disclosure |
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The State Bar for some time did not publicize the existence of the task force, its objectives or its meetings. Now it has published a survey on the State Bar website. Gib Walton <gwalton@velaw.com> appointed the task force to "study" this issue with an eye toward whether Texas should adopt this rule. The following people are on the task force: "David
Beck"
<DBECK@brsfirm.com> (Chair) (Ron Bunch and Gary Reaves are GPSolo Council members.) This issue was prompted by a letter (with attachments) sent by Austin lawyer, Charles Herring (a member of the task force), to the Supreme Court. A scan of these comments as published by the State Bar Board of Directors can be downloaded here. If you think the survey questions are poorly drafted or prejudicial, consider downloading them and answering the ones you deem relevant and sending the result to the task force. The background of the Rule is this: In 2004 the ABA adopted a "model rule" requiring a lawyer to disclose whether he or she carries professional liability insurance. Here is the comment from the ABA website:
The rationalization for this rule is "to provide a potential client with access to relevant information related to a lawyer's representation in order to make an informed decision," but its obvious effect is anticompetitive and enhanced vulnerability to claims and suits. The task force (without Ron Bunch or Gary Reaves) met on December 21 and were given assignments such as: 1. Obtain available data regarding the rate of legal malpractice claims against insured attorneys versus uninsured attorneys. 2. Determine whether other State Bar Task Force comparing the Texas Disciplinary Rules and the ABA's Model Rules will be making a recommendation on insurance disclosure by Texas attorneys. 3. Obtain available data regarding the cost of professional liability insurance, and whether it would be possible to "pool" solo practitioners or smaller firms into an insurable "group". In this connection, the "pool" approach employed by Oregon should be reviewed. 4. Obtain available data regarding whether malpractice claims increase when an attorney is insured. 5. Review what is happening in California with respect to insurance disclosure issues. 6. Contact Chair of Small Firms Section of State Bar and advise them of the work of the Task Force and invite them to provide whatever input they deem appropriate. 7. Prepare appropriate questions for a survey to be sent to all Texas attorneys, the Young Lawyers Section, Local Bar Associations, and perhaps others. 8. Obtain available data regarding the experience in those States that have adopted some form of insurance disclosure by attorneys, and the effect on professional liability insurance rates in those jurisdictions. 9. Contact Bill Miller, President of the TYLA, and advise him of the work of the Task Force and invite whatever input the TYLA deems appropriate. 10. Determine whether other States require other professions to disclose the availability of professional liability insurance. 11. Determine the nature of, and the scope of, the annual survey addressing legal services to the poor. [Relevance unclear] Your input on this proposition and on these issues is very important. Make your views known.
Send your comments to the members of the task force with a copy to David Beck, the Chair of the Task Force, and also to Gib Walton. We on the Council would also like to know what you think. You may send your comments to Gary Reaves, the Chair of the Section, or the Webmaster or both.
One lawyer has already shared his experience that notifying the public of the existence of liability insurance through the designation "L.L.P." significantly enhanced threats of malpractice claims against his firm. The "Texas Lawyer" has previously run a series of interviews with malpractice lawyers who have admitted that they will not take cases if there is not collectable insurance. Other responses include the following: 1. Mandatory disclosure inverts the purpose of insurance. Insurance is not for the protection of clients or "the public." The essential characteristic of insurance -- particularly, liability and casualty insurance -- is the sharing of the risk of loss among a group of individuals who share the same or similar risk. The risk is known buat the event leading to any particular loss is not. The reason to insure against such a loss is the belief or knowledge that a person could not bear the loss individually. Insurance inherently is not for the protection of a third party. Claiming that it is inverts the function and intention of insurance. So far, claims of "public protection" have very limited application, as in the requirement of "financial responsiblity" for the so-called privilege of driving a motor vehicle. These latter applications are limited because: (1) it is recognized they constitute exceptions and inversions of the purpose of insurance; and (2) because they are seen as practical balances against other social policies. Those considerations do not apply to the practice of law. 2. The forced disclosure benefits primarily insurance companies and malpractice lawyers. 3. Forced disclosure is unfair. There is no other "learned profession" which requires this kind of disclosure (nor for the reason stated in #1, should there be). 4. Forced disclosure implies a judgment by the Bar. Requiring a disclosure of liability insurance inevitably carries the implication that a lawyer should have it and that in the eyes of the Bar or the Supreme Court the existence or non-existence of liability insurance is a consideration in hiring so "relevant" that it is justifiable to force disclosure. 5. It is a form of market discrimination in the same way that "not board certified" advertising requirement was. This is the opposite of the direction the Bar should be moving. 6. Disclosure of the existence of insurance promotes litigation. Malpractice lawyers will not accept cases where there is not a substantial indemnity pool to insure recovery. 7. A potential client who gives primary consideration to the existence of liability insurance in legal representation is not looking for personal service but a result-indemnity. 8. Force disclosure of the insurance coverage creates a bargaining imbalance. If it were a legitimate concern of a client whether an attorney carried liability insurance, it would be just as legitimate a concern for a lawyer to know whether a client considers insurance a criterion for choice of a lawyer. No experienced lawyer would take on a client who asks, "Do you carry malpractice insurance?" 9. It is not a closely guarded secret that some advocates of mandatory disclosure see it as a stepping stone to mandatory liability insurance as is done in Oregon. |
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