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Bar News - January 3, 2003 Lawyers Required to Disclose Lack of Malpractice Insurance By: Lisa Segal THE NH SUPREME Court has approved a new rule that requires attorneys in private practice to disclose to clients if they have less than $100,000 per occurrence and $300,000 in the aggregate in legal malpractice insurance coverage. The new Rule 1.17 of the Rules of Professional Conduct goes into effect March 1, 2003. Under the rule, notice to clients about malpractice coverage must be provided on a separate form to be signed by the client and kept on file by the attorney until at least five years after termination of representation. Also, within 30 days of the effective date of the rule, lawyers must provide similar notices to existing clients for signature. Attorneys who work for the government or who are employed as in-house counsel for a business or other entity are exempt from the rule. Full text of the new Rule 1.17 can be found in the Supreme Court order on page 23. NH joins only a handful of other states that require attorneys to notify clients if they do not maintain a minimum level of malpractice insurance. According to US Law Week (May 29, 2001) and the ABA publication Bar Leader (November-December 2002), Alaska, Ohio, South Dakota and Virginia require client notification if an attorney isn't covered by professional liability insurance. Oregon is the only state that mandates malpractice insurance as a condition of practicing law. Illinois is the first state without a mandatory bar to consider a proposal that would require practicing attorneys to either maintain malpractice liability insurance or demonstrate that they have the "financial responsibility" to pay claims. According to Bar Leader, that proposal - endorsed by the state bar association - is being considered by the rules committee of the Illinois Supreme Court. Montana's state bar, after debating the issue, tabled a mandatory disclosure requirement. Louisiana's legal community is considering a mandatory malpractice insurance disclosure rule rather than a coverage requirement, according to Bar Leader. The NH rule was drafted based on the malpractice coverage disclosure requirements of other states. The Supreme Court's Advisory Committee on Rules recommended the requirement to the court after a public hearing. The court also held a public comment period before approving the rule. Supreme Court Chief Justice David A. Brock said that the insurance disclosure rule will help clients make a more educated decision on whether to retain a lawyer who doesn't have malpractice coverage. "We think the new rule will provide important information for consumers of legal services," Brock said in a news release. Former Professional Conduct Committee Chair Robert Varney wrote a letter that initiated development of the new rule. The topic of insurance disclosure was addressed at an American Bar Association conference that Varney attended in 2001. When the NH rule was proposed, Varney said he saw it as a simple solution to a problem he encountered too many times as a PCC member. "I've seen quite a few instances in which an attorney has let a client down, has committed malpractice, and is without assets to compensate the client for that. It's difficult to look at that client and tell them nothing can be done," said Varney in the June 7, 2002 Bar News. "This rule seems like a quick, simple and very effective way to encourage attorneys to purchase malpractice insurance. This way, when a person selects an attorney who doesn't have malpractice insurance, he knows right where he stands," Varney said.
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