You Must Disclose This About Malpractice Insurance

If you don’t have, or drop, malpractice insurance, here’s what you must do.

Under California Rules of Professional Conduct 1.4.2 (replacing former Cal Rules of Prof Cond 3-410), lawyers must disclose in writing the absence of professional liability insurance.

This disclosure must be made directly to a client at the outset of the attorney-client relationship when the lawyer knows or reasonably should know that the total amount of time to be used in representing the client will exceed 4 hours. This rule applies to both new clients and new engagements with returning clients.

And if a lawyer had professional liability insurance when the representation started but later lost it, the lawyer must inform the client in writing within 30 days of when the lawyer knows or reasonably should know that he or she no longer has the insurance . Cal Rules of Prof Cond 1.4.2.

There are some notable exceptions to Rule 1.4.2. It doesn’t apply to:

  1. a lawyer who knows or reasonably should know at the time of  engagement that the representation won’t exceed four hours (but if it does, the lawyer must comply with the rules);
  2. a lawyer who works as a government lawyer or in-house counsel when representing or providing legal advice to a client in that capacity (this doesn’t apply to, for example, outside counsel for a private or governmental entity, or to counsel retained by an insurer to represent an insured);
  3. a lawyer who’s providing legal services in an emergency to avoid foreseeable prejudice to the client;
  4. a lawyer who has previously advised the client in writing that the lawyer doesn’t have professional liability insurance.

When disclosing the lack of professional liability insurance in writing, the lawyer can include it in the fee agreement or a separate letter. It should state something clear and simple like this:

Under California Rules of Professional Conduct 1.4.2, I am informing you in writing that I do not have professional liability insurance.

If it’s a situation in which professional liability insurance is no longer maintained during the representation, the lawyer should write something like this:

Under California Rules of Professional Conduct 1.4.2, I am informing you in writing that I no longer have professional liability insurance.

Get sample provisions to include in a fee agreement, including helpful guidance on when to use them, in CEB’s Fee Agreement Forms Manual, chap 1. And check out CEB’s program Fee Agreements: A Lawyer’s Most Effective Tool to Manage Expectations, Protect Themselves, and Get Paid.

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© The Regents of the University of California, 2019. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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