Mandatory insurance issue to be before VSB Council

05/18/2006

The response to whether Virginia should have mandatory legal malpractice insurance depends on the question that frames the issue.

If the question is, "How many unsatisfied judgments against lawyers are acceptable?" the answer is none, Robert W. Minto Jr. suggested at a meeting last week of the Virginia State Bar's lawyer malpractice insurance committee. Minto is president and chief executive officer of ALPS, the VSB-endorsed malpractice insurance carrier.

That seems to be the question the Supreme Court of Virginia and the House of Delegates had in mind when they asked the VSB to study whether enough is being done to protect the public from negligent or dishonest lawyers.

On the other hand, if the question is, "Does the bar have a legal malpractice crisis?" or even a substantial problem, the answer appears to be no. That seems to be the question that lawyers are asking.

Two members of the committee, former VSB President Jeannie Dahnk of Fredericks-burg and John Berry of Madison, emphasized statistics that show that the VSB is in the forefront of regulatory bars when it comes to legal malpractice insurance.

Almost 90 percent of the state's 17,000 lawyers who have private clients say they have insurance, and only 12 lawyers reported that they had unsatisfied judgments.

Moreover, the bar maintains a Web site that lists those lawyers who don't have malpractice insurance.

Indeed, Minto said, "You have one of the more significantly insured bars in the country."

Dahnk said those facts are going to make it very difficult to sell mandatory malpractice insurance to state lawyers.

"I think the committee is going to get pummeled unnecessarily and maybe unfairly" if any such effort is made, Dahnk said.

"We're out of touch if we don't think we have to be careful how we present this to Bar Council," Berry said.

Thomas A. Edmonds, VSB executive director and a member of the committee, said the plan is for its chairman, Darrel Tillar Mason, to prepare a report outlining the background and possible alternatives for the VSB council to consider, but to take no action on, at its annual meeting next month.

Those alternatives include doing no more than what the bar is doing now, which is more than most regulatory bars are doing, in requiring disclosure of malpractice insurance and making it public, Edmonds said.

The bar also could strengthen the disclosure requirements by requiring lawyers to tell clients directly if they do not have insurance.

And a subcommittee looking at mandatory malpractice insurance has identified four ways to accomplish it:

• An uninsured malpractice claims fund similar to the Clients' Protection Fund that would be operated by the VSB.
• Requiring lawyers to buy coverage in the open market.
• Providing coverage through a VSB-controlled program, much as is done in Oregon, the only state with mandatory malpractice insurance.
• Supplementing mandatory coverage available through the open market by a VSB-controlled assigned risk fund.

Berry suggested yet another alternative: barring lawyers with unsatisfied judgments from practicing law.

Committee member Bruce Marshall of Richmond law firm DurretteBradshaw said, "That doesn't protect the public so much as it punishes the lawyer."

Minto said he has been involved with three other state bars that have gone through a similar exercise, all of which met with hostility from their membership. None followed through with a mandatory plan.

Mason said her report to the council will include the pros and cons of each approach.

She and Edmonds also suggested that the report will be a good-faith response to the concerns raised by the legislature and the Supreme Court.

That exercise is necessary, said Michael Glasser, a former VSB president and a member of the committee. "No one likes to act under a threat," he said, "but it's there."

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