MSBA Considers Legal Malpractice Disclosure Requirement for Maryland Lawyers
~Board of Governors opposes measure~
By Janet Stidman Eveleth

While most of Maryland focuses on medical malpractice and its impact on doctors, the Maryland State Bar Association’s Board of Governors (BOG) recently turned its attention to legal malpractice insurance as well. At the request of the Honorable Robert M. Bell, Chief Judge of the Court of Appeals, the BOG recently considered a proposal to require attorneys to report their professional liability insurance coverage annually so consumers can go to a central databank and see if their attorney is insured.

Although most attorneys across the state carry professional liability insurance, it is neither required nor disclosed. Most clients assume their attorney has malpractice insurance. At the present time, clients need only ask their attorney if they carry professional liability insurance, and the attorney is required to provide this information. While this system works well in Maryland and most clients are well-informed, the American Bar Association (ABA) believes required insurance disclosure will provide greater protection for consumers.

The ABA’s Standing Committee on Client Protection has asked Maryland’s Court of Appeals to review a proposed model rule on lawyer insurance disclosure. This proposal would require lawyers to disclose whether they maintain professional liability insurance on their annual registration statement. The ABA seeks this measure “to provide potential clients with access to relevant information related to a lawyer’s representation in order to make an informed decision about retaining a certain lawyer.”

Most clients merely presume their attorney is insured, and in most cases they are right. According to the ABA, this measure would provide consumers with a way of ensuring their attorney has insurance. Ultimately, “it could reduce potential public harm by giving consumers of legal services an opportunity to look elsewhere if they discover their attorney does not carry insurance.”

The intended benefit of the ABA Model Rule is to facilitate the client’s ability in determining if the lawyer is insured. Essentially, it invokes an annual reporting requirement on the lawyer. As proposed, “the information disclosed by the lawyers will be made available as designated by the Court.” To date, only 12 states require some type of disclosure, whether it is through an annual registration form or directly to the client. Oregon is the sole state that mandates legal malpractice coverage.

On November 23, the BOG considered and voted unanimously to oppose the ABA’s proposed Model Rule on Lawyer Insurance Disclosure. MSBA President Neil Helfrich reported that the ABA House of Delegates voted in favor of this motion by a very small margin. “It’s a divisive issue,” he said.

Robert L. Ferguson, Jr., Chair of the Board of Governor’s Legal Malpractice Disclosure Committee, reported that, after careful consideration, “we are not in favor of this measure and recommend leaving things the way they are. As proposed, there appear to be many levels of disclosure which will just confuse clients.”

“Clients can just ask the attorney, and he or she will tell them,” continued Ferguson. “We feel there are a number of potential problems with accuracy relating to this. If clients feed misinformation into the databank, like the wrong spelling of the attorney’s name, the results will be skewed, and maintenance of the databank poses a number of potential problems.”

“Mandatory insurance reporting is just one more layer of bureaucracy. Our Committee saw no need for the further regulation of lawyers in terms of insurance. Plus, this proposal is fraught with misinformation, so it would be of very limited benefit to the public.” Therefore, MSBA opposes the ABA’s Model Rule on Lawyer Insurance Disclosure and will convey this position to the Court of Appeals.