This is a status report provided by the New Jersey State Bar Association on recently passed and pending legislation, regulations, gubernatorial nominations and/or appointments of interest to lawyers, as well as the involvement of the NJSBA as amicus in appellate court matters.
In response to the Supreme Court’s issuance of the Report of the Ad Hoc Committee on Attorney Malpractice Insurance, the NJSBA cautioned the Court that mandatory coverage and/or mandatory disclosure requirements for attorneys could impose a “very real harm and hardship” for both the public and for attorneys. The comments were submitted by the association last week, in response to the report.
The ad hoc committee issued a report recommending against mandatory malpractice insurance and recommending mandatory reporting and disclosure to the Court as to the existence of professional liability insurance. The committee was unable to achieve consensus on the question of a proposed rule of court to communicate with a client the existence or nonexistence of certain insurance coverage in a form prescribed by the rules with a request to the client to acknowledge the notification.
The association supports a recommendation rejecting mandatory malpractice insurance, but disagrees with the committee’s recommendation to mandate attorney disclosure in connection with malpractice insurance. “Frankly, there is no evidence that either requirement is necessary or will resolve any demonstrated problem in connection with the ability of consumers to obtain quality legal services and to have recourse available in the event of negligent representation,” said NJSBA President Robert B. Hille. “There is evidence, however, that, if mandated, both requirements will engender more confusion than clarity for the public, and will pose a myriad of problems for attorneys, particularly solo and small-firm attorneys, and those offering legal services in high-risk, consumer-oriented practice areas, such as real estate, family and estate administration.”
The NJSBA echoed the concerns in the committee’s report that the New Jersey insurance marketplace does not effectively accommodate the liability insurance needs and circumstances of New Jersey attorneys. Studies conducted by the association show that malpractice insurance rates in New Jersey are 33 percent higher than in Pennsylvania and 49 percent higher than in New York, due to unique factors in New Jersey—the extended statute of limitations for malpractice claims in New Jersey and the potential of attorney’s fee awards under Saffer v. Willoughby, 143 N.J. 256 (1996). The NJSBA’s study also uncovered the fact that only five carriers actually write legal malpractice insurance policies in New Jersey, although 25 are currently authorized to do so. Against these facts, New Jersey attorneys face almost insurmountable obstacles in obtaining affordable malpractice insurance, and costs would most certainly be passed onto clients. Furthermore, the proposal does not provide protections to clients by way of more, or even appropriate, coverage for malpractice claims.
The association’s concerns with a mandatory disclosure requirement are similar, and could be linked to a volatile insurance market, which could force good attorneys out of practice through no fault of their own, according to Hille. “If insurance coverage is important to a client, there is nothing prohibiting the client from asking about it; however, there is no clamor from the public to obtain insurance coverage information,” he said.
Finally, the association recommended that if the Court did implement a mandatory requirement, that safeguards be put into place such as not requiring the amount of coverage, and that an affirmative provision be included that prohibits an attorney’s disclosure from being used as a standard for civil liability.
The association has long supported legislation to bring the statute of limitations of all licensed professionals to two years, in line with medical doctors, and to remove Saffer fees from malpractice litigation. Assembly bill 480 (Prieto) was introduced earlier this month and is supported by the Coalition of Licensed Professionals. The coalition is a group of licensed professionals and stakeholders, including certified public accountants, architects, engineers, dentists and every county bar association, that supports bringing the statutes of limitations for professional malpractice claims in line with neighboring states. It is monitoring this and similar issues in the new session.