Not many people are aware (including practitioners) that California attorneys are not required to have malpractice insurance in order to practice law in this state. However, last week, the California Supreme Court adopted a new rule (Rule 3-410) requiring lawyers that do not have malpractice insurance to disclose that fact in writing to their clients. (source) Discussions for such a rule have been brewing since 2007.
It’s tough to say what this will mean for practitioners. It comes down to how clients react when they receive a disclosure in writing that his/her lawyer is not insured for malpractice. I have certainly hired professionals in the past without verifying that they are insured. However, had I received a written disclosure that he/she is not insured I may have felt alarmed enough to question the disclosure in the first place. Indirectly, this disclosure rule will likely lead to many uninsured lawyers purchasing the minimum policy available in order to comply with the disclosure rule. Buying a policy for a couple hundred dollars a year is far cheaper than risking the loss of one client.
