Solos and the insurance debate

By Jeff Bleich
President, State Bar of California

Bleich

My sense over the years is that new State Bar policies provoke greater resentment among lawyers at small firms than at large ones, and that the bar’s Board of Governors hasn’t always been as sensitive as it should be to those concerns. This has come to the fore in the recent discussions over restoring the state’s long-standing insurance disclosure rules, and so I’d like to devote this column to acknowledging the concerns of small and solo practitioners generally and how those relate to the insurance disclosure debate. 

Personally, I think that small and solo practitioners are justified in demanding that the State Bar be more sensitive to their concerns. Although all State Bar rules apply equally to all lawyers, as a practical matter, some rules tend to place a greater burden on small or solo lawyers, because they don’t have professional managers to take care of the details. A solo’s time spent on bar administration is time taken away from his or her practice, and so there are real costs associated with every new obligation that the bar adopts. For that reason, solos have a right to demand that any new obligation imposed by the State Bar is there for a good reason and takes into account the administrative burdens they already face.

When the bar fails to do that, it creates lingering frustration and resentment. More than one small firm lawyer has told me that over the years, they’ve felt picked on by a particular administrative demand that they felt was pointless — whether it had to do with CLE requirements, a specific ethics rule or some reporting duty. This attitude can cast a shadow over how they view everything else the bar does, good and bad.

Role of solos

As President, I’ve hoped to rebuild bridges with small and solo practitioners, and to keep in mind that ultimately, small firm and solo lawyers are the most important legal service providers in the state. It isn’t just that small and solo lawyers account for the vast majority of State Bar members, it’s that they perform the most needed work. Big companies and wealthy people have no shortage of good lawyers to handle their problems, big or small, important or not.  But the legal issues that can be life changing for a person — a divorce, a deportation, an eviction, losing their job, possibly losing their liberty — are most often handled by lawyers who work in small and solo firms.

As a member of the bar’s board, I served as a liaison to the small and solo section, and I’ve stayed committed to ensuring that this important voice is heard in the board’s deliberations. In recent years, the board has made real strides. Many of its members have come from smaller firms, and more effort has been focused on how to ease the burdens that small and solo firms face. The Small and Solo Section has developed a strong voice on all board decisions. And it has worked hard to help reduce the challenges to small firm practitioners: with everything from its excellent “Big News” magazine edited by Lisa Miller, to a Mentor Directory, free MCLE and other ways to reduce or share administrative burdens. 

But a few years of success can’t wipe out decades of built-up concerns and resentments, and that takes us to the issue of insurance disclosure. The recent debate on this issue has prompted concerns — including letters to the editor by my friends Stephen Barnett at UC Berkeley and Ed Poll, a former Chair of the Council on Sections — that the State Bar is being encouraged by powerful insurance interests to adopt a feel-good measure that does not accomplish anything other than force small and solo lawyers to buy expensive malpractice insurance and increase the cost and burden on solos. These worries reflect what I’ve been talking about: a lingering doubt about whether the board is controlled by big interests and insensitive to the concerns of small and solo lawyers.

So, in advance of the board’s vote, I’d like to be clear about at least one thing: the voices of small and solo practitioners have been heard loud and clear. The pending proposal — which merely restores a rule that was long in effect in California — is: (1) not an insurance industry proposal at all; (2) a direct response to genuine concerns from the public; and (3) will not require anyone to buy malpractice insurance who does not want it. Far from pandering to the insurance industry, the board’s goals have been to increase public protection by reducing the cost of insurance for solos, increasing its availability to those who can’t currently afford it, and rejecting absolute insurance mandates in favor of informed consent. 

No mandatory insurance

The question of imposing mandatory malpractice insurance isn’t before the State Bar at all.  That debate, frankly, isn’t very different from the national debate about universal health insurance: i.e., do you make insurance universally accessible by reducing its cost and hope people will buy it, or do you make it universally mandated by punishing lawyers who don’t buy it.

The State Bar has taken the first approach and rejected the idea of mandating insurance, precisely because of concerns by small and solo lawyers. We all understand the problem that malpractice insurance can be too expensive for some lawyers — particularly those in certain high stakes or high-emotion practices. Most solos don’t decline insurance because they want to put their assets and clients at risk if they make a mistake; it’s because they can’t afford it. To pay the current premiums they’d have to charge more to underserved people who already are having difficulty paying their legal fees, or they would have to make ends meet by cutting back on pro bono or other services to the community. We’ve heard these concerns, and that is why the resolution currently before the board doesn’t require anyone to buy insurance. On the contrary, it directs the bar to seek ways of getting insurance carriers to reduce the cost of malpractice insurance and to use pooling arrangements to make insurance universally available to all lawyers. 

Client assumptions

Insurance disclosure, however, is a different story. Most of us expect that if we go to a doctor they have insurance in the event they make a mistake and injure us. The average legal client assumes the same thing: they believe their lawyer either has insurance or will be upfront with them if they don’t have insurance. In fact, that was the rule for many years until the law expired in 2000. Since then, the bar has heard from dozens of victims of malpractice that they were shocked to learn that a lawyer who made a serious mistake in their case was uninsured, and now there is no way for them to be compensated for their injury short of bankrupting their lawyer. Their complaint is not that the lawyer lacked insurance, but that they didn’t know about it. That was the genesis for reviving the insurance disclosure rule: a rule that worked well in California for many years and which applies in more than a dozen other states. 

What should have been a simple question — whether to restore the old rule of informed consent in response to numerous complaints by members of the public — has raised questions in the letters to the editor because of the old resentments and mistrust. And so the board has made a concerted effort this time to ensure that all voices have been heard and that the policy has been refined to address all valid concerns.

What the proposal says

The current proposal, developed with the leadership of board member John Dutton, reflects his active devotion to assuring fairness to solo and small firm practitioners. It merely provides that in cases in which an uninsured lawyer expects a representation to take more than four hours of work, they advise a client in advance that they do not have insurance. That way, the client and the attorney understand the risk together and there can be no nasty surprises later. The attorney does not have to advise anyone other than the client as part of the confidential relationship — i.e., there is no public notice of his or her uninsured status.

And as a practical matter, this will not impair the attorney-client relationship. If anything, it improves it.

A review of insurance disclosure in other states as well as California’s own experience with its disclosure rule, confirms that uninsured lawyers are not put out of business by such a rule, or forced to buy insurance and dramatically change their practices. On the contrary, insurance-getting rates remain about the same, and lawyers’ practices remain unchanged. Although people may still have different opinions about insurance disclosure, the board’s analysis at least confirms that it has been sensitive to the interests of small and solo practitioners and it has genuinely attempted to develop a proposal that protects the public while respecting these lawyers’ interests.

In short, we still have a lot of work to do to strengthen the confidence of small and solo practitioners in the State Bar, but the board and bar are committed to this effort, and we’re making progress.