Mandatory Malpractice Insurance? An important Vermont survey.

Vermont lawyers are not required to carry malpractice insurance or to notify clients that they don’t.  A joint committee comprised of members of the Professional Responsibility Board and the Vermont Bar Association’s Board of Managers is studying whether that should change.  Later this year, the committee will issue a report in which it will either:

  1. recommend that the PRB and VBA propose that the Supreme Court adopt a rule requiring attorneys to carry malpractice insurance; or,
  2. recommend that the PRB and VBA propose that the Supreme Court amend the Rules of Professional Conduct to require lawyers who do not carry malpractice insurance (or whose coverage lapses) to notify clients and prospective clients; or,
  3. recommend that Vermont maintain the status quo.

Oregon and Idaho are the only two states that require lawyers to carry malpractice insurance. Oregon has done so for decades.  It’s a mandatory bar and lawyers obtain insurance via the state bar’s Professional Liability Fund.  In 2019, the Idaho Supreme Court approved a recommendation from the Idaho State Bar and required lawyers to purchase insurance on the open market.

Several states require lawyers who do not carry malpractice insurance to notify their clients.  For example, Rule 1.19 of the New Hampshire Rules of Professional Conduct requires lawyers in the Granite State to notify a client “at the time of the client’s engagement of the lawyer” if the lawyer does not maintain professional liability insurance in amounts of least $100,000 per occurrence or $300,000 in the aggregate.  The rule also requires lawyers to notify clients if the coverage ceases or falls below those minimums.

Still other states take a different approach, requiring lawyers to disclose their insurance on status on the annual licensing statement and making that status available on the licensing body’s website.  Included in this group are Maine, Massachusetts, and Rhode Island.

Finally, many states do not require insurance or disclosure of a lack thereof.

A chart of all 50 states is here.

The Committee wants lawyers to weigh in. To that end, the Committee created this survey. Last week, the VBA sent the survey to members.  As Vermont is not a unified bar, the Committee welcomes survey responses from non-VBA members.  The deadline is June 15.  Again, the survey is here.

Need more information? Earlier this year, the Washington Supreme Court published for comment a proposed rule that would require disclosure of a lawyer’s malpractice insurance status.  The proposal follows work done by Washington’s Mandatory Malpractice Insurance Task Force.  In 2019, the Task Force issued this report.  In my view, it’s the most current and thorough review of malpractice insurance landscape.

Legal Ethics