Commentary

Malpractice Insurance Status Should Be Disclosed to Clients

The Supreme Court's committee has reached the right result in solving this difficult problem of weighing client interest with the interest of attorneys in terms of fairness and practicality. We would, however, offer one caveat to the committee’s recommendation.

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In February 2014, the Supreme Court appointed an ad hoc committee to address the questions of whether attorneys should disclose to clients and report on the annual registration statement whether they carry professional liability insurance; whether such a client disclosure requirement would unfairly burden small firms and solo practitioners; whether such a disclosure requirement is even necessary if there is no mandate to maintain professional liability insurance; and whether mandatory insurance itself would unfairly burden small firms and solo practitioners.

After extensive review and discussions of material contained in its 170-page report, the committee concluded that professional liability insurance should not be mandatory for New Jersey attorneys because it would be unworkable in the marketplace and unfairly punitive to small firms, solo practitioners and attorneys engaged in the part-time practice of law. Except for Oregon, other jurisdictions studying the question have determined mandatory malpractice coverage is neither practical nor necessary for attorneys to serve their clients competently. This conclusion has been echoed by the American Bar Association after study of the subject.

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