Mandatory Legal Malpractice Insurance: Exposing Lawyers’ Blind Spots

Abstract

The legal landscape for lawyers’ professional liability in the United States is changing. In 2018, Idaho implemented a new rule requiring that lawyers carry legal malpractice insurance. The adoption of the Idaho rule was the first move in forty years by a state to require legal malpractice insurance since Oregon mandated lawyer participation in a malpractice insurance regime. Over the last two years, a few states have considered whether their jurisdictions should join Oregon and Idaho in requiring malpractice insurance for lawyers in private practice. To help inform the discussion, the article examines different positions taken in the debate on mandatory insurance and recent empirical research related to uninsured lawyers and legal malpractice litigation. The article focuses on arguments in favor of mandating insurance and considers approaches that may address particular concerns expressed by those who oppose requiring lawyers to carry professional liability insurance. The article also considers select alternatives to mandatory insurance. After concluding that mandatory insurance better promotes public and lawyer protection than the alternatives, the article examines reasons why decision makers fail to require that lawyers carry a minimum level of insurance. Drawing on ethics scholarship and behavioral psychology research, the article notes that individual uninsured lawyers may fail to see the consequences of their conduct because they have a blind spot. The conclusion also suggests that the bar and judiciary may suffer from a collective blind spot that contributes to lawyers and judges not seeing financial accountability as an ethics issue. The conclusion urges decision makers and insured lawyers to address the blind spots and promote their states joining Oregon, Idaho and countries around the world that recognize that financial accountability is a hallmark of an ethical profession.