When Lawyers Screw Up
LESLIE C. LEVIN*
* Joel Barlow Professor of Law, University of Connecticut School of Law. I am grateful to Carol Bernick and Mark Dubois for sharing their vast knowledge of lawyer malpractice claims and lawyer discipline, respec tively. I also thank Jon Bauer, Susan Saab Fortney, and Herbert Kritzer for their very helpful comments on an earlier draft of this essay. © 2019, Leslie C. Levin.
Lawyer malpractice can have devastating consequences. The failure to handle a criminal case competently can lead to a wrongful conviction. A missed deadline in a personal injury case can preclude a seriously injured client from recovering damages. Lawyer malpractice can result in huge tax liability, the loss of major business, and the dissolution of companies. In some cases, the harm caused by malpractice—such as the loss of liberty or deportation—is incalculable. Lawyer professional liability (LPL)1 is difﬁcult to detect and hard to prove. Moreover, even if a plaintiff can prove liability, it may be impossible to recover damages if the lawyer is uninsured. Lawyer malpractice undermines the public’s trust in lawyers. Yet until recently, little has been known about the incidence of LPL claims, their resolution, their cost, and the ways in which LPL insurance affects lawyer behavior and clients’ recoveries.2
In their book When Lawyers Screw Up: Improving Access to Justice for Legal Malpractice Victims,3 Herbert Kritzer and Neil Vidmar signiﬁcantly advance our understanding of these issues. They provide a detailed portrait of lawyer malpractice in the United States and demonstrate why it is so hard for victims to recover damages. Theirs is not an easy undertaking. Legal malpractice often goes undetected. Even when a client learns of lawyer malpractice, the problem is some times resolved informally without notifying the LPL insurer of a possible claim.
The authors focus mainly on what can be learned about legal malpractice from malpractice claims reported to insurers, and from the lawyers and insurers who handle those claims. This, too, is difﬁcult, because insurers often treat their information as proprietary. Kritzer and Vidmar have deeply and creatively researched their topic, drawing on state insurance regulators’ databases, insurance companies’ reports, American Bar Association (ABA) proﬁles, juror experiments, and interviews. As they acknowledge, the available information is limited and incomplete, making attempts to generate reliable ﬁgures challenging. Nevertheless, their book reveals some important and never-before reported information about, inter alia, the incidence of LPL claims, their resolution, insurance payouts, and the obstacles individuals, in particular, face when attempting to obtain redress from lawyers who “screw up.”
As the authors explain, the story of lawyer malpractice is really two stories. Just as Jack Heinz and Edward Laumann famously reported in their study of Chicago lawyers that the legal profession is split into two hemispheres—the large corporate and the individual services market4—so, too, are LPL claims and the LPL insurance market. Kritzer and Vidmar organize much of their discussion around these divisions. They provide illustrative examples of claims and legal issues that arise in malpractice cases, dividing them by practice areas serving individuals (e.g., personal injury, divorce) and those involving business matters.5 They then address some important preliminary issues concerning lawyer liability and LPL claims in the United States. These include the surprising fact that law yers are not required to carry malpractice insurance except in Oregon (and very recently, Idaho), a description of the LPL insurance markets for large ﬁrm and small ﬁrm lawyers, the bases for lawyer liability, and the legal challenges plain tiffs confront when bringing a malpractice claim.6 They also describe the disconnect between lawyer malpractice and lawyer discipline.7 One consequence is that even if a lawyer is disciplined for behavior that constitutes malpractice, a client cannot recover damages for the harm caused without pursuing a separate malpractice claim.8 And if that client sues, there is no guarantee of success.
It can be difﬁcult and expensive for plaintiffs to prove legal malpractice.9 Statutes of limitations preclude recovery in some jurisdictions because the statute is short or the harm is not discovered until long after the occurrence.10 It is usually necessary to hire one or more expert witnesses.11 Where the malpractice occurred in a litigation matter, plaintiffs must demonstrate that they would have won that case if it had gone to trial (proof of the “case-within-a-case”).12 Where malprac tice occurred in criminal cases, plaintiffs in many jurisdictions must show their actual innocence to prevail.13
Even when plaintiffs prove their case, there is usually no recovery for non-pecuniary damages, including the emotional distress associated with lawyers’ mistakes.14
One of Kritzer and Vidmar’s major contributions is their detailed portrait of the frequency of lawyer malpractice claims, the manner in which the claims are resolved, and the payments made to resolve them.15 A malpractice “claim” is a notiﬁcation to an insurer about a demand by a third party or about an occurrence that could give rise to liability.16 Lawyers report thousands of LPL claims to insurers every year.17 The claims rates vary substantially depending upon the size of the law ﬁrm. About 3.75 out of every 100 lawyers working in solo and small (two-to-ﬁve lawyer) ﬁrms report a claim to insurers annually.18 These ﬁgures do not, however, fully reﬂect the incidence of possible malpractice, because many solo lawyers, in particular, do not carry LPL insurance.19 The annual claims rate for large ﬁrms is about 7.5 out of every 1000 lawyers.20 In Oregon, where lawyers in private practice are required to purchase LPL insurance, the claims rate is substantially higher, with 12 out of every 100 lawyers reporting claims annually.21
Most LPL claims do not result in payments by insurers.22 Some claims are “repaired” (i.e., ﬁxed or mitigated) after insurers receive a claim and no insurance payment is required.23 Nevertheless, Kritzer and Vidmar roughly estimate that annual LPL insurance payouts—including indemnity payments and the cost of defense—exceed $1.2 billion annually.24 This ﬁgure does not represent the full amount paid annually for malpractice claims, as virtually all LPL policies have deductibles or retentions.
Those can range from $1,000 to over $50,000 in solo and small ﬁrms and can be much higher in large ﬁrms.25 The ﬁgure also does not include claims that are paid out of lawyers’ pockets to resolve a matter without ever notifying an insurer. Nor does it include malpractice damages that are never paid because many lawyers are uninsured.
I. THE ACCESS TO JUSTICE PROBLEM FOR LAWYER MALPRACTICE VICTIMS
In When Lawyers Screw Up, the authors discuss malpractice in both the large and small ﬁrm context, but are especially concerned with the problem that ordi nary people often cannot obtain redress when their lawyers make serious mis takes. Individuals are usually represented by solo and small ﬁrm lawyers. These lawyers are more likely than large ﬁrm lawyers to be the subject of malpractice claims.26 This may be, in part, because these lawyers have fewer back-up systems or colleagues who can help them avoid mistakes. Moreover, unlike large corporate clients which can threaten to take their considerable business elsewhere if the lawyer refuses to “make it right,” individuals—often one-shot players in the legal system—rarely have such clout. So their only hope for redress is a malpractice claim. Yet many solo and very small ﬁrm lawyers do not carry LPL insurance.27 If there is no insurance, Kritzer and Vidmar’s interviews reveal, experienced plaintiffs’ LPL lawyers will almost never take on the malpractice case.28 Plaintiffs’ lawyers know that even if a case is meritorious, they will not receive their contingent fee because there will be no money to pay the judgment.
It is difﬁcult to determine how many lawyers are uninsured in many jurisdictions, including some states with large numbers of lawyers such as California, Florida, and New York.29 Yet data collected by regulators in a few states suggest the size of the problem. In South Dakota, where lawyers are required to directly to disclose to clients if they are uninsured, the ﬁgure is relatively low, at about 6%.30 In contrast, in Michigan, more than 20% of lawyers in private practice do not carry LPL insurance.31 In Illinois, 41% of solo lawyers do not carry insurance.32 In Texas, a state bar survey revealed that 63% of solo lawyers were uninsured.33
Even if individuals can ﬁnd an attorney who will bring a malpractice case against an uninsured lawyer and they prove their case, they are unlikely to recover damages. Some lawyers are uninsured because they cannot afford LPL insurance.34 Such lawyers are also unlikely to have the means to pay a malpractice judgment. Other uninsured lawyers who have assets shield them in ways that make them judgment proof.35 Uninsured lawyers sometimes declare bankruptcy to avoid paying malpractice claims.36
The problem for legal malpractice victims is not limited to uninsured lawyers. Even if the lawyers who commit malpractice are insured, experienced legal malpractice attorneys decline to take on cases when the damages are low.37 Given how difﬁcult and expensive lawyer malpractice cases are to prove, if the likely recovery is only $50,000, plaintiffs’ lawyers will earn little for their time and effort.38 They will rarely agree to take a low-value case, and will only do so if they think they can settle quickly with an insurer.39 Lawyers not experienced with LPL cases may take on a low-value matter, but non-specialists often do not understand the challenges of bringing such a case and are less likely to be successful.40
Kritzer and Vidmar describe this as an access to justice problem.41 In many ways it is.42 LPL cases are much too complex for unrepresented litigants to handle successfully on their own. If individuals cannot obtain competent legal representation to pursue their LPL claims, they cannot effectively access the courts. If lawyers are not required to pay for the harm they cause clients, justice is also denied. The authors’ portrait of lawyer malpractice—including the signiﬁcant challenges victims face when pursuing their claims—highlights a serious problem. States have failed to adequately protect the public’s interests when lawyers commit malpractice.
Consider the issue of whether lawyers in private practice should be required to maintain LPL insurance. Canada, Australia, England, and most other European countries require such lawyers to carry LPL insurance.43 The authors report that in Missouri—the only state for which such data are available—the median claim payment for solo lawyers was $24,351, and for lawyers in two-to-ﬁve lawyer ﬁrms was $34,034.44 If U.S. solo and small ﬁrm lawyers—those most likely to be uninsured—were required to maintain $100,000 per occurrence of LPL insurance, it would cover the majority of claims against them. That insurance can be purchased in most jurisdictions by most lawyers for $3,000 or less annually.45
In many states, professionals such as physicians and dentists, and some other service providers—including real estate brokers, pest inspectors, and massage therapists—must carry liability insurance to maintain their licenses.46 In the United States, where insurance is required to own a car, why are lawyers not required to carry LPL insurance?47 Or, at a minimum, why are there not some other mechanisms to better enable victims of lawyer malpractice to recover when lawyers cause them harm?
II. THE POLITICS OF LAWYER MALPRACTICE REGULATION
The answer to why more is not done to protect the public is largely because state courts—which maintain primary responsibility for regulating lawyers— tend to defer to the legal profession’s recommendations. The legislature, in turn, tends to defer to the state courts. There are structural and other reasons why this occurs.
Courts are inherently reactive institutions.48 They do not have the time or resources to do their own fact-gathering. They often rely on the legal profession to study issues and make recommendations.49 So, for example, state courts gener ally rely on the ABA’s recommendations concerning the rules that should govern lawyers’ professional conduct.50 It is no secret that the legal profession’s recom mendations often favor its own interests.
Theories of regulatory capture help to explain why lawyers’ interests often pre vail over those of the public. Capture is a process by which regulation “is consis tently or repeatedly directed away from the public interest and toward the interest of the regulated industry by the intent and actions of the industry itself.”51 Capture can occur when regulators “depend too much on the industries they regu late for information, political support, or guidance.”52 Capture also occurs because the cultural or social inﬂuence of repeated interaction with the regulated industry may cause the regulator to think like the regulated industry and fail to “easily conceive another way of approaching its problems.”53 James Kwak explains how this “cultural capture” occurs through shared identity, perception of status, and social relationships.54 He notes:
some factors that should make cultural capture a particularly important channel of industry inﬂuence are a high degree of similarity between industry representatives and regulators; an industry with a notable social purpose with which regulators can identify; an industry with high social, cultural, or intelLectual status; many social connections between industry and regulators; and technically complex issues for which it is not clear how the beneﬁts of policy alternatives are shared.55
It is not difﬁcult to see regulatory capture in the context of judicial regulation of the legal profession. Courts have become dependent on the legal profession to analyze issues and to make recommendations concerning lawyer regulation. State judges are also politically dependent on lawyers for judicial campaign con tributions56 and for recommendations that enable them to attain or retain their positions.57 Cultural factors further help to explain why judges tend to favor law yers’ interests.58 Judges are former lawyers and continue to identify with them. As Benjamin Barton explains, judges “instinctively favor the legal profession in their decisions and actions.”59 Dennis Jacobs, former Chief Judge of the Second Circuit Court of Appeals observed that judges are “proud of being lawyers.”60 They “have a high regard for our profession, its processes, its culture and values, and its judgments.”61 Judges enter their positions believing—as they learned in law school—that the legal profession is, and should remain, “self-regulating.” While they also identify as judges, their thoughts and actions “are inﬂuenced by the group afﬁliation that is most salient in a given context.”62 As between the interests of lawyers and the public, judges are more likely to identify with law yers, especially when there are rarely opposing interest groups that are advocating for the public’s interests.63
So why, then, are state legislatures not protecting the public? Kritzer and Vidmar brieﬂy note some possible explanations. Legislators may have concerns that courts will strike down legislation imposing requirements on lawyers on sep aration-of-powers grounds.64 Alternatively, legislatures may not have done more “because of the combination of lawyers constituting a signiﬁcant portion of the membership of state legislatures” and “the generosity of lawyers as campaign contributors.”65 The authors do not seem convinced by those explanations. And indeed, although some state courts claim the exclusive right to regulate lawyers, many courts share the power to regulate the legal profession with legislatures.66 Moreover, fewer than ﬁfteen percent of state legislators nationwide are lawyers,67 suggesting that legislatures would not necessarily favor lawyers’ interests.68 And unlike campaign contributions to judges—which come primarily from lawyers— campaign contributions to state legislatures come from many sources. A more likely explanation for legislative inaction is that legislatures traditionally depend on the courts to oversee lawyers and will not become involved unless a problem emerges that garners public attention.69 The problems created by uninsured law yers receive relatively little media coverage,70 and so the public has not mobilized to demand changes in the status quo.
Kritzer and Vidmar pose the question, “[w]hy is Oregon the only jurisdiction in the United States that requires [LPL] insurance?”71 They do not attempt to an swer the question (understandably, because their focus is elsewhere), but it is an important one to consider. If courts are “captured” and legislatures are relatively indifferent, how did Oregon come to impose this requirement?
The short answer is that the legal profession wanted it. During the 1970s, legal malpractice claims increased sharply, and it became harder—and more expensive— for lawyers to obtain LPL insurance.72 In 1970, almost forty percent of respondents to an Oregon State Bar (OSB) survey reported that their LPL insurance premiums had been raised and ten percent indicated that their insurers were showing reluctance to renew coverage.73 The majority of respondents favored a bar-sponsored plan for LPL insurance that would be mandatory for private practitioners.74 At the OSB’s request, the 1973 Oregon legislature authorized the OSB to require all lawyers in private practice to carry LPL insurance,75 but the OSB did not impose a requirement at that time. By the mid-1970s, the cost of LPL insurance for Oregon lawyers had more than tripled in the preceding ten years, claims against lawyers had increased “dramatically,” only two commercial LPL insurers wrote coverage in Oregon, and Oregon lawyers paid “among the highest premiums in the country.”76 The OSB voted at its 1976 annual meeting to seek legislation authorizing the creation of a pro fessional liability fund to insure all of its lawyers in private practice.77 The Oregon legislature passed the law in 1977.78
Other states that considered the issue in the 1970s did not impose an insurance requirement.79 Many states have since considered imposing an LPL insurance requirement, but ultimately rejected the idea, due to concerns about cost and other bar opposition.80
In 2017, forty years after Oregon imposed an LPL insurance requirement, Idaho became the second state to do so.81 Like Oregon, the Idaho initiative to require LPL insurance came from the state bar.82 In 2018, the Nevada State Bar petitioned the Nevada Supreme Court to adopt such a requirement, but with little explanation, the petition was denied.83
ADDRESSING THE ACCESS TO JUSTICE PROBLEM
So what changes might states implement—if they were looking at this from the public’s perspective—to better address the access to justice problem for victims of lawyer malpractice? Unfortunately, there is no simple, single ﬁx. In their ﬁnal chapter, the authors offer some partial solutions. The facts they develop earlier in their book shed light on the likelihood that their suggestions—and some others offered here—will work to protect the public. These suggestions include LPL in surance requirements or alternatively, enhanced disclosure requirements, and other mechanisms to increase victims’ recoveries.
Not surprisingly, Kritzer and Vidmar view an LPL insurance requirement as an important step toward protecting the public.84 There is some recent move ment in that direction. In addition to the developments in Idaho and Nevada, an insurance requirement is also is being considered in California, Georgia and Washington.85
The argument in favor is primarily public protection.86 Secondarily, proponents argue that it is important to the public’s perception of lawyers and to the profes sion’s ability to continue to self-regulate.87 The main argument against an LPL in surance requirement is that some lawyers simply cannot afford it and would be unable to practice law.88 Opponents also contend that such a requirement may force other lawyers to raise their rates or to perform less pro bono work.89 In addi tion, opponents argue that since insurers can set high premiums and deny cover age altogether, it would be insurers—and not the courts—that would determine which lawyers could practice law.90 Some fear that if all lawyers are insured, they will become a “target” for lawsuits.91
Not surprisingly, most of the opposing arguments focus on lawyers’ interests. The most compelling seems to be that some uninsured lawyers truly cannot afford LPL insurance. We do not know how many lawyers fall into that category.92 Many lawyers are uninsured because they do not think they need insurance, either because they believe they are careful lawyers or because they are engaged in low- risk practices.93 Some are philosophically opposed to it.94 When uninsured law yers report that they are uninsured because of the cost, they do not necessarily mean that they cannot afford LPL insurance.
In some cases, they simply do not want to pay the premium because their earnings from their legal work are relatively low.95 This may be because they are at or near retirement96 or are primarily working on a pro bono basis. A survey of New Mexico uninsured lawyers suggests that less than twenty percent of its uninsured lawyers truly may be unable to pay for LPL insurance.97 The same lawyers who cannot afford LPL insurance are also unlikely to be able to pay for malpractice claims.
The argument that an insurance requirement would force some uninsured lawyers who provide pro bono and low-cost legal services to raise their rates or discontinue their pro bono work directly implicates the public interest. Yet it does not seem to be a good reason for exempting large numbers of lawyers from an in surance requirement. A survey of New Mexico uninsured lawyers suggests that less than eighteen percent performed any pro bono work.98 For lawyers who per form exclusively pro bono work, this problem can be addressed, as it is in Oregon and Idaho, by exempting lawyers from purchasing insurance if they work through bar-approved pro bono programs that provide insurance coverage to volunteer lawyers.99 It is true that there may be a small number of lawyers who serve under- served populations, charge very little, barely eke out a living, and cannot afford LPL insurance.100 It may be that exceptions to an insurance requirement can be made for such lawyers, whose clients can be afforded some protection through a client malpractice fund.101
The other arguments against mandatory insurance are less compelling. For example, the claim that it would be insurance companies and not the courts that determine who can practice law does not bear up under scrutiny. Some states may be able to create a professional liability fund like the one in Oregon that insures all lawyers, regardless of their claims experience. In states that require lawyers to purchase LPL insurance in the open market, lawyers can seek to join law ﬁrms that provide insurance if they cannot otherwise afford it. They may also be able to work in other settings (e.g., the government, in-house) where they need not per sonally purchase insurance. In most states, there are multiple insurance compa nies that will write insurance for solo and small ﬁrm lawyers102 and indeed, only a tiny percentage of lawyers do not carry insurance because they cannot obtain coverage.103 If all insurance companies in a state consider a lawyer to be an unac ceptable risk, why should the lawyer be permitted to practice law uninsured?
Idaho’s recent experience requiring lawyers to carry $100,000/$300,000 of LPL insurance purchased on the open market suggests that an insurance require ment does not produce dire consequences. In Idaho, the average mid-career solo and small ﬁrm lawyer pays roughly $2400–$2500 per year for LPL insurance.104 As far as the Idaho State Bar can ascertain, every lawyer who wished to secure coverage was able to do so.105 Most of the previously uninsured lawyers pur chased the minimum amount of insurance with no prior acts coverage.106 Consequently, their ﬁrst year of coverage cost them $1000–$1300, although it will rise in the future.107 Some lawyers licensed in Idaho who did not practice law there chose to change to inactive status. Likewise, some older lawyers changed to senior status or became emeritus members (enabling them to perform pro bono work).108 However, these lawyers can resume active practice if they purchase LPL insurance.109
Finally, the concern that an insurance requirement would make lawyers a “tar get” of frivolous lawsuits appears misplaced. In Oregon, where the Professional Liability Fund (PLF) insures all lawyers in private practice whose principal ofﬁ ces are in Oregon, lawyers pay $3300 annually for $300,000/$300,000 coverage, regardless of their claims experience.110 The PLF receives about 12 claims annu ally for every 100 insured lawyers,111 which is signiﬁcantly higher than the roughly 3.75 claims per hundred lawyers in other states, where not all lawyers are insured.112 This differential can be partly—but not entirely—explained by the fact that all Oregon private practitioners are in the insurance pool. Moreover, there are no deductibles for claims covered by the Oregon PLF, making it likely that lawyers submit all claims, in contrast to lawyers in other states who may choose not to notify their insurers when claims against them do not exceed their deductibles. In addition, the reported claims rate may be higher in Oregon because lawyers’ annual payments to the PLF are not based on claims experience, so there are no adverse consequences for Oregon lawyers when they submit claims. While it may be that more claims are brought against Oregon lawyers because lawyers are known to be insured, it does not appear that there are more “frivolous” claims in Oregon. Indeed, Oregon lawyers report a high level of satis faction with the way in which the PLF handles claims,113 suggesting that claims are handled and paid appropriately.
As Kritzer and Vidmar note, the most common alternative approach to an in surance requirement is that lawyers disclose whether they maintain LPL insur ance. This is the approach suggested by the ABA,114 and approximately half of the states have some sort of insurance disclosure requirement.115
In seven states, lawyers are required to directly disclose to clients if they do not maintain insurance.116 South Dakota has the most robust direct disclosure rule, which requires lawyers to disclose directly to clients if they do not maintain at least $100,000 of LPL insurance and to convey this information in every written communication with clients and in any advertising.117 In other direct disclosure states, the information is typically only communicated to clients through written notice at the time of engagement,118 except in Pennsylvania, where the information is also posted on the Supreme Court’s Disciplinary Board website.119 In sixteen other states, insurance information is disclosed to regulators, but in only ten of those states is the information published on state court or bar websites.120
Kritzer and Vidmar view the South Dakota approach to insurance disclosure as “ideal” as compared to other states,121 but even it has limitations. In South Dakota, the information about whether a lawyer is insured is not posted on any state website, meaning that unless the lawyer advertises, clients usually do not learn that the lawyer is uninsured until the lawyers sends a written communica tion to a client. This may not occur until after the client has agreed to the repre sentation.122 In most of the other direct disclosure states, where insurance information is not required to be disclosed until the lawyer sends the retainer let ter or related documents, clients “probably fail to notice it just as they fail to notice many details in a legal document.”123 Kritzer and Vidmar suggest that law yers be required to give clients a short pamphlet at the outset of representation that describes potential avenues of redress if the client is dissatisﬁed and includes a prominent check-in-a-box to indicate whether the lawyer is insured.124 Alternatively, they suggest that when the client is provided with a fully executed retainer letter, it be accompanied by a cover sheet prominently indicating whether the lawyer is insured.125
The authors’ suggestions would be improvements, but they do not address some larger problems with current insurance disclosure regimes. First, clients are unlikely to terminate the representation if they do not learn the lawyer is unin sured until after they have orally agreed to engage the lawyers’ services. Cognitive biases make it difﬁcult for a client to change course once a decision to retain a lawyer has been made.126 Social norms, power imbalances, and time pres sure also make it hard for a client to “disengage” from the lawyer at that point.127
While some states post lawyers’ insurance information on websites for the public, it is unlikely that the public ever sees this information. They have little reason to look for it because the public believes that all lawyers are insured.128 If they think to search for the information, it is not easy to locate. This information usually cannot be found through a simple internet search engine inquiry. Members of the public ordinarily must locate the correct state court or bar web site and enter a lawyer’s name. Kritzer and Vidmar suggest that state bars should periodically undertake a public service announcement to alert residents to the availability of lawyers’ insurance information on websites.129 This is a good sug gestion, but even more is needed.
The problem is that not only does the public fail to ﬁnd this information, but it does not understand the potential implications of lawyers being uninsured. Many people believe that lawyers are afﬂuent130 and do not realize that some uninsured lawyers lack the means to compensate clients for malpractice. They do not know that lawyers are allowed to shield their assets from malpractice actions. Lawyers’ insurance information posted on ofﬁcial websites does not address this problem. For example, when the public sees that an Arizona attorney does not have LPL in surance, they are told only that “Arizona lawyers are not required to have profes sional liability insurance” and that lawyers in private practice are “required to report whether or not they carry such insurance.”131
The Virginia State Bar (VSB) website states under its “Frequently Asked Questions” section that the VSB does not require lawyers to obtain LPL insurance, “but encourages them to purchase coverage,” with no further explanation.132 The Washington State Bar Association website states that not all lawyers maintain LPL insurance and that “[s]ome lawyers may make a responsible decision not to maintain insurance because… the lawyer may choose to be ﬁnancially responsible (self-insured).”133 This statement may mislead the public into believing that all uninsured lawyers will “self-insure.”
At a minimum, the public should be able to ﬁnd a lawyer’s insurance status through a simple internet search engine (e.g., Google) and the website should state unambiguously that if clients hire an uninsured lawyer, they may be unable to recover on legal malpractice claims. In addition, uninsured lawyers should be required to display this information in law ﬁrm advertising—as they are in South Dakota—and should also be required to prominently display this information on their law ﬁrm websites so that the public can learn before ever contacting the law yer that the lawyer is uninsured.
OTHER MECHANISMS TO INCREASE VICTIMS’ RECOVERIES
As Kritzer and Vidmar note, insurance requirements are only a partial solution to the access to justice problem. They discuss some other ideas that would make the law more favorable to plaintiffs and enable them to recover damages for non economic harm.134 They also suggest one-way attorneys’ fee shifting (requiring the defendant to pay a winning plaintiff’s attorneys’ fees) to incentivize plain tiffs’ lawyers to take on LPL cases that involve relatively modest damages. They point to New Jersey, where such one-way fee shifting can occur.135 This seems likely to encourage more lawyers to take on low-value cases against insured law yers, but it is unlikely to induce them to take cases against uninsured lawyers, who may lack the means to pay for attorneys’ fees if a judgment is entered against them. Before implementing such a change, it would be important to consider its impact on the cost of LPL insurance. New Jersey’s relatively high LPL premi ums, in comparison to neighboring states,136 are probably partly due to its plain tiff-friendly laws, but fee-shifting may also contribute to the cost of LPL premiums there. High premiums may reduce the likelihood that a state will require all lawyers in private practice to carry LPL insurance and could even result in more lawyers going bare.
The authors also suggest that certain legal malpractice claims might be handled outside the courts through alternate dispute resolution mechanisms that make it possible for victims to pursue such claims without legal representation.137 They point to the Legal Services Ombudsman and the Financial Ombudsman Services in England or consumer dispute tribunals in Australia and the Netherlands as models.138 They also outline the practical problems with attempting to import these approaches to the United States. Lawyers are regulated by each state, and it is unlikely that smaller states would generate sufﬁcient claims to have a viable operation that could justify the expenditures to maintain these new entities.139 The authors creatively suggest pooling arrangements among several states,140 but their proposal may require claimants and witnesses to travel great distances to prove their claims. Moreover, these additional tribunals would require a level of funding that may make them difﬁcult to implement in the United States.141
In sum, there are no easy solutions to effectively address the access to justice problem that Kritzer and Vidmar identify. Many of the ideas that they offer are good ones, notwithstanding some of the obstacles they may encounter. In the same spirit, I would also like to offer two other ideas. My proposals, like those pro posed by the authors, are only partial and are not without challenges, but they may also help address some of the difﬁculties that victims face when lawyers screw up.
MONETARY AWARDS IN DISCIPLINE PROCEEDINGS
State lawyer discipline systems could do more to help the victims of lawyer malpractice. Discipline systems are currently geared toward protecting the public from lawyers who have misbehaved, rather than compensating the victims of law yer misconduct.142
This forces malpractice victims to hire another lawyer to seek monetary relief elsewhere. While restitution is recognized as an appropriate disci pline sanction in several jurisdictions,143 it is rarely awarded, except when law yers have misappropriated funds or otherwise have been unjustly enriched.144 A few states occasionally order fee restitution in discipline cases when lawyers neglect client matters.145 More states should routinely do so.146 But fee restitution only provides victims with very limited relief, and it provides none if the lawyers were working on a contingent fee basis.
The rules governing lawyer discipline could be amended to do more for vic tims by providing for limited monetary awards when certain lawyer misconduct rises to the level of lawyer malpractice. As Kritzer and Vidmar note, Israel’s dis cipline tribunal can award aggrieved clients up to 25,000 NIS (about $6500 U.S.) when a disciplinary violation causes harm.147 In Australia, some state lawyer disciplinary tribunals can award compensation orders up to $25,000 AUD (about $18,000 U.S.).148
Such awards would not run afoul of the right to a jury trial in most jurisdictions if this compensation does not displace the right to bring a malpractice action in court and the lawyer can obtain judicial review of the award.149 In the context of lawyer regulation, some courts have even upheld the constitutionality of mandatory non-reviewable arbitration to resolve lawyer-client fees disputes.150 The courts’ reasoning for why this process does not run afoul of the right to a jury trial rests, in part, on courts’ special responsibilities to regulate lawyers and the fact that law practice is not a right, but a privilege.151 Thus, the courts reason, the state may impose reasonable conditions and limitations on those who wish to practice law.152 Courts have also justiﬁed these decisions in the fee arbi tration context by noting the importance of a system that can be used effectively by clients, who are on an unequal footing with their lawyers, and on the impor tance of maintaining public conﬁdence in lawyers and the judicial system.153
Awarding some compensation in discipline proceedings would also not violate attorneys’ due process rights. As the United States Supreme Court has noted, “Due process is not necessarily judicial process.”154
It merely requires notice and an opportunity to be heard before an impartial observer and the right to confront and cross-examine witnesses.155 These rights are recognized by the ABA Model Rules on Lawyer Disciplinary Enforcement,156 and are provided by the lawyer discipline procedures in many states.157
In order for disciplinary authorities to make awards to malpractice victims in disciplinary proceedings, some changes would be required. Disciplinary proce dures would need to be amended to authorize limited compensatory awards. Courts would need to acknowledge that lawyer discipline is not only designed to protect the public and the administration of justice,158 but also to beneﬁt vic tims.159 Disciplinary counsel would need to reorient their perspective to consider the interests of victims when they prosecute discipline cases.160 Courts would need to consider whether to treat a ﬁnding of attorney misconduct that was accompanied by a monetary award in a discipline proceeding as having any col lateral estoppel effect on a malpractice action.161 If courts conclude that it should have some collateral estoppel effect, state rules of professional conduct may need to be clariﬁed because they currently state that “[v]iolation of a Rule should not itself … create any presumption in such a case that a legal duty has been breached.”162 Insurance companies that do not already include coverage for disci pline defense in their LPL policies would need to amend their policies to do so.163 Permitting limited monetary awards in discipline proceedings will place some additional fact-ﬁnding burdens on the decision makers, but they should not be unduly onerous.
Many discipline cases involve neglect of client matters,164 where the appropriate standard of care is clear. Causation can be proved as it is in a mal practice case, using expert evidence, where necessary.165 Awards might be capped at $25,000 to limit extended evidentiary hearings over the upward value of complex claims. Disciplinary authorities could also retain the discretion to make no monetary awards when lawsuits have also been ﬁled or where fact- ﬁnding would be especially complex.
Finally, even if disciplinary systems do not award money to malpractice vic tims, they can more routinely take the approach recommended by Kritzer and Vidmar, which is to impose automatic suspension or disbarment on lawyers who do not pay malpractice judgments.166 Such sanctions already have been imposed on lawyers who have failed to pay in a few instances.167 As the authors recognize, this is not likely to incentivize plaintiffs’ malpractice lawyers to take on cases against uninsured lawyers, but it may increase the likelihood that lawyers who have the means will pay judgments against them.168
REVISION OF THE BANKRUPTCY LAW
Lawyers who commit malpractice should be prevented from using the bank ruptcy laws to avoid compensating their victims. As previously noted, some law yers strategically use the bankruptcy laws to avoid malpractice claims.169 Moreover, under the current bankruptcy laws, a lawyer cannot be suspended from practice or denied readmission solely for failing to pay a malpractice judg ment where that liability has been discharged in bankruptcy.170 Some courts take the view that even after a lawyer’s declaration of bankruptcy, they can require restitution as a condition of probation or readmission on the theory that restitution is not imposed solely because of the attorney’s failure to pay the debt, but also because paying restitution helps to rehabilitate the lawyer.171 A few courts state that they can consider the failure to make some restitution of a discharged debt because it shows a lack of rehabilitation.172 Some courts have concluded otherwise.173
To address these problems directly, the bankruptcy code could be amended so that malpractice judgments are not dischargeable in bankruptcy. There are al ready somewhat similar exceptions to the discharge of debts in bankruptcy, such as for domestic support obligations; personal injuries caused by operating a vehi cle when intoxicated; any debt for fraud or defalcation when acting in a ﬁduciary capacity; restitution ordered in a federal criminal case; and judgments, settle ments or court-ordered payments due for certain violations of the securities laws.174 Likewise, an exception for malpractice judgments would preclude law yers from discharging debts in bankruptcy to avoid the consequences of the harm they have caused. While there might be cases in which insured lawyers, in good faith, grossly underestimated their likely exposure and are underinsured, these might be addressed by creating an exception for “undue hardship” in the bank ruptcy law.175 This exception should not, however, protect lawyers who have shielded assets and are deliberately uninsured or underinsured.
When Lawyers Screw Up ﬁlls in many of the signiﬁcant gaps in our knowledge about lawyer malpractice in the United States. Kritzer and Vidmar had to rely on sometimes limited data, but their careful analysis of the available information has advanced our understanding enormously.
Hopefully, this book will prompt regulators and state bars to encourage insurers in their states to collect and release more information to round out our understanding of lawyer malpractice. This in formation beneﬁts lawyers, who can better assess their own risk of liability and likely exposure. It also beneﬁts insurers and regulators, because the analyses provide them with the opportunity to see the larger picture of how the LPL insurance market works—and does not work—in the United States.
The book is especially valuable for courts and other lawmakers, as it convincingly sheds light on the challenges that individuals, in particular, face when lawyers commit malpractice, and why it can be so hard for some victims to recover damages. Many of the solutions the authors propose deserve careful consideration.
Ultimately, however, the biggest problem presented by lawyer malpractice is not with devising solutions.
The problem is the lack of will by the courts, legislatures, and the bar to adequately protect the public when lawyers screw up.
Leslie Levin is an expert on the legal profession, ethical decisionmaking and lawyer discipline, subjects she has examined in numerous scholarly articles, book chapters and presentations, as well as in her role as co-editor (with Lynn Mather) of Lawyers in Practice: Ethical Decisionmaking in Context.
She was the principal investigator on a study funded by the Law School Admissions Council of the predictive value of the bar’s character and fitness inquiry.
A member of the UConn Law faculty since 1994, she also has taught at New York University School of Law and the University of Haifa (as a Fulbright Specialist) and served as a visiting research fellow at the University of Queensland. From 2012-2014, she served as the Law School’s associate dean for academic affairs.
Professor Levin, a graduate of Northwestern University’s Medill School of Journalism and Columbia Law School, clerked for Judge Robert W. Sweet in the Southern District of New York.
She subsequently practiced for fourteen years at Patterson, Belknap, Webb & Tyler, where she represented media clients, engaged in commercial litigation and served on the firm’s Ethics Committee.
She also served as secretary to the Committee on Professional and Judicial Ethics of the New York City Bar Association.
She has served on the Connecticut Bar Association’s Task Force on the Future of the Legal Profession and on the Connecticut Joint Task Force on Attorney Trustee Accounts.
Professor Levin served as the first director of the Law School’s Lawyering Process Program and as the first faculty pro bono coordinator.
At the request of the Connecticut Judicial Branch Access to Justice Commission, she co-authored a report and recommendations about access to justice for self-represented litigants.
She currently serves on the Board of Connecticut Legal Services.
Leslie Levin, The End of Mandatory State Bars?, 109 Geo. L. J. Online 1 (2020)
Leslie Levin, When Lawyers Screw Up, 32 Geo. J. Legal Ethics 109 (2019)
Leslie Levin, The Impact of International Lawyer Organizations on Lawyer Regulation, 42 Fordham Int’l L. J. 189 (2018) (with Lynn Mather and Leny de Groot-van Leeuwen)
Leslie Levin, Lawyers Going Bare and Clients Going Blind, 68 Fla. L. Rev. 1281 (2016)
Leslie Levin, Regulators at the Margins: The Impact of Malpractice Insurers on Solo and Small Firm Lawyers, 49 Conn. L. Rev. 553 (2016)
Leslie Levin, The Questionable Character of the Bar’s Character and Fitness Inquiry, 40 Law & Soc. Inquiry 51 (2015) (with Christine Zozula & Peter Siegelman)
Leslie Levin, The Monopoly Myth and Other Tales About the Superiority of Lawyers, 82 Fordham L. Rev. 2611 (2014)
Leslie Levin, Why Context Matters, in Lawyers in Practice: Ethical Decision Making in Context (Leslie C. Levin & Lynn Mather eds., 2012) (with Lynn Mather)