[ OUR OPINION ]
Make lawyers divulge
coverage for malpractice
|
A committee of the American Bar Association is recommending the "model court rule," and the association will consider it at a meeting in Atlanta this week. If approved and adopted in Hawaii, it would require lawyers in private practice to disclose in their annual registration with the state Supreme Court whether they are covered by professional liability insurance and alert the court when the coverage lapses. The information would be available to the public by telephone or Internet.
The Hawaii State Bar Association has voted to oppose the proposal. Dale Lee, the state bar's president, says the ABA model would create a false sense of security because it would not require disclosure of details such as policy limits. However, in its report, the ABA's committee on client protection recommends that each state "decide if it wants to include, in its version of the rule, minimum limits of professional liability coverage."
The committee points out that five states already require the disclosure of malpractice insurance, but not coverage limits, in lawyers' annual registration with their highest courts. The ABA proposal is patterned after those states' rules.
Four other states require lawyers to disclose their malpractice coverage directly to clients, but not in their annual registrations with the judiciary. Alaska, New Hampshire and Ohio require lawyers to disclose to their clients if they don't maintain a policy with limits of at least $100,000 per claim and $300,000 annual aggregate. South Dakota requires disclosure of a $100,000 claim limit to clients. The nation's largest legal malpractice insurers' smallest policy limit is $200,000 per claim and $600,000 annual aggregate.
During a recent four-year period, 36,844 legal malpractice claims were reported nationally, according to an ABA study. The number of potential claims that were not pursued because of lack of insurance is a matter of speculation.
"Claims against uninsured lawyers are often abandoned, precisely because there is no available insurance," according to the ABA committee. Many malpractice lawyers choose not to file suits on behalf of clients for modest claims because the difficulty in collecting judgments "simply makes such claims not worth pursuing," it added.
In Hawaii, Rieko Tanaka sued attorney Richard Y.S. Lee for malpractice last year and won a $184,000 judgment. Madelyn Purcell, Tanaka's attorney, told the Star-Bulletin's Rob Perez that Richard Lee, a former state judge who has no malpractice insurance, has sheltered his assets, making collection difficult. He responded that attorney corporations commonly "structure one's holdings" for purposes of estate and asset planning.
The ABA committee recognizes the importance of protecting people who are unsophisticated about the law from attorneys who are not covered by malpractice insurance. With or without the national model, the state bar should support such disclosure of coverage, including details, to clients and to the Supreme Court.
