I moved to Michigan 11 years ago, right after law school. Ever since I started paying Bar dues in 2005, I’ve had to disclose my legal malpractice insurance status on my dues statement. I never thought twice about it and never considered whether the information was confidential. As an associate at a midsize firm, I had coverage and thought it was reasonable to let the Bar know about it. I assumed the disclosure was just a Michigan-specific necessity, like saying “up north” or hating Ohio State. When I came to ICLE in 2008, I stopped representing clients, so I haven’t had to consider the malpractice insurance issue lately.
This past September, the State Bar of Michigan’s Representative Assembly overwhelmingly rejected a proposal that would have required mandatory public disclosure of legal malpractice insurance status. This was a surprise to me; I assumed it would pass.
Intrigued by the opposition to the proposal, I did some digging and learned that the Michigan Supreme Court only began requiring disclosure to the Bar in 2003. This was right around the time that mandatory malpractice disclosure rules of various stripes were popping up around the country. (Keep in mind that we’re talking about mandatory disclosure, not mandatory coverage. Oregon is the only state requiring coverage, handled via a professional liability fund created by the Oregon State Bar Board of Governors.)
As I looked around at various states’ regulations, I realized that Michigan’s current approach requires far less than many states, and even the September proposal was quite modest in comparison. For example:
- Ohio and Alaska require lawyers to notify clients about their coverage and to have a certain minimum amount of coverage.
- Virginia requires lawyers to notify the State Bar, and the Bar informs the public on request.
- Delaware lawyers must notify the state’s supreme court, and the public can then request to review the records.
- The North Carolina State Bar requires disclosure, which it posts on its website.
Those opposing public disclosure (including some of the Michigan lawyers I heard from at the State Bar Annual Meeting) feel that it’s an overreach into lawyers’ individual business practices. They don’t like the idea of stigmatizing those who choose not to get coverage, or giving insurance companies so much power. Some said they might support a rule requiring disclosure of insurance status to a potential client, but not to the public at large, to whom they don’t owe a fiduciary duty.
The question comes down to what we want to achieve with a public disclosure rule. Is it just transparency in service of Michigan consumers, or is it something more? If the purpose of public disclosure is to nudge all lawyers toward securing malpractice insurance, wouldn’t the Bar just skip that step and require coverage, taking a page out of Oregon’s book? Given the response to the recent proposal, I’m guessing that kind of solution is a long way off.