WSR 20-01-040
[December 4, 2019]
NO. 25700-A-1281
Equal Justice Washington, having recommended the suggested amendment to APR 26Insurance Disclosure, and the Court having approved the suggested amendment for publication;
Now, therefore, it is hereby
(a) That pursuant to the provisions of GR 9(g), the suggested amendment as shown below is to be published for comment in the Washington Reports, Washington Register, Washington State Bar Association and Administrative Office of the Court's websites in January 2020.
(b) The purpose statement as required by GR 9(e), is published solely for the information of the Bench, Bar and other interested parties.
(c) Comments are to be submitted to the Clerk of the Supreme Court by either U.S. Mail or Internet E-Mail by no later than April 30, 2020. Comments may be sent to the following addresses: P.O. Box 40929, Olympia, Washington 98504-0929, or Comments submitted by e-mail message must be limited to 1500 words.
dated at Olympia, Washington this 4th day of December, 2019.
For the Court
Fairhurst, C.J.
chief justice
Suggested Amendment
Admission and Practice Rule 26
Submitted by Equal Justice Washington
A. Name of Proponent:
Equal Justice Washington
P.O. Box 25061
Federal Way, WA 98093
B. Spokespersons:
Kevin Whatley
C. Purpose:
In Washington State, it's not a requirement to carry malpractice insurance to be a licensed attorney representing the public. Although the majority of attorneys are responsible and carry malpractice insurance, approximately 14% or 2,752 attorneys in private practice do not. Solo and small firm practitioners represent the largest group, with an astonishing 28% of solo practitioners choosing not to carry malpractice insurance, and yet they pose the greatest risk to the public, the legal system and access-to-justice. According to the Office of Dispensary Council, solo and small firm practitioners represent the largest group of disciplined attorneys and the highest rate of complaints to the ODC.
To put it into perspective, with so many uninsured attorneys, the sheer number of clients exposed without basic public protection is staggering. In a 12 month period, at just one client a month or 12 clients a year, that number is 33,024 clients exposed to potential harm. These numbers are conservative at best; most attorneys handle more than one client a month, and with just two or three a month that number rapidly approaches 60,000-100,000.
Currently, only two states in the union have been progressive and strong enough to protect the public and make mandatory malpractice insurance a requirement to practice law. Oregon was the first in 1977, and just recently Idaho in 2018. Traditionally the American legal and judiciary system has always been one of the world's leaders, but in this area the rest of the world has surpassed us. The vast majority of all common and civil law countries require malpractice insurance. All Australian States, Canada, the majority of the European Union, and several countries in Asia require malpractice insurance. It should also be noted the minimums in these countries range from one to two million dollars, far more than what is being proposed here today. In this area it is clear: the rest of the world is far more progressive than we are when it comes to basic public protection systems.
What we know about the nature of malpractice and its victims:
On September 28th, 2017, the Board of Governors adopted a charter for the Mandatory Malpractice Insurance Task Force. Its mandate was to focus on the nature and consequences of uninsured lawyers, examine current malpractice insurance systems, and gather information and comments from the WSBA members and other interested parties. In addition, it was to develop a working model for how to move forward in Washington State with a basic protection system - a draft rule, the same rule that is before you today. So why is the Mandatory Malpractice Insurance Task Force draft rule not being proposed by the WSBA Board of Governors even though the Task Force unanimously decided to recommend, adopt and propose the draft rule to the Supreme Court?
This is a great question, and the answer is completely germane to the Task Force findings and what we know about the nature of malpractice and its victims. Let's examine its key takeaways:
1. "The Board of Governors should recommend, and the Washington Supreme Court should adopt, a rule mandating continuous, uninterrupted malpractice insurance for actively-licensed lawyers engaged in the private practice of law, with specified exemptions."
2. "Lack of malpractice insurance is, fundamentally, an access-to-justice issue, and the Task Force has concluded that it is more than appropriate for lawyers to ensure their own financial accountability."
3. "The Board of Governors' decision whether to recommend action on uninsured lawyers, and the Court's ultimate decision on this matter, must be approached overwhelmingly from the perspective of what is good for the public and what is good for clients - not what might be convenient or desirable for lawyers themselves."
4. "A license to practice law is a privilege, and no lawyer is immune from mistakes. The members emphasized that a key goal of the Task Force is to recommend effective ways to ensure the clients are compensated when lawyers make mistakes. Because 14% of Washington lawyers are in private practice and do not carry malpractice insurance, the Task Force members determine that those lawyers pose a significant risk to their clients."
5. "Protection of the public is the overriding public duty of lawyers, the WSBA and the Washington Supreme Court. The WSBA's mission statement list four core missions: to serve the public, to serve the members of the Bar, to ensure the integrity of the legal profession, and to champion justice. 3 out of those four goals emphasize the public mission of the organized Bar."
6. "Equally if not more important is the language of the Washington Supreme Court's GR 12. GR 12.1 begins: 'Legal services providers must be regulated in the public interest." GR 12.1 Then list 10 specific objectives, leading off with "protection of the public" and proceeded to list nine other regulatory objectives, all of which are orientated toward the protection of clients and access to justice."
7. "Ultimately, the task force concluded that when one weighs the apprehensions of those who resist malpractice insurance against the large number of clients who are exposed to harm by uninsured lawyers, the balance tips in favor of client protection."
8. "Uninsured lawyers create an access-to-justice problem: their clients are typically unable to pursue legitimate malpractice claims against them because plaintiffs' lawyers cannot afford to bring action against uninsured practitioners."
In answering the question as to why the mandatory malpractice draft rule is not being proposed by the WSBA Board of Governors and instead being advanced by victims of malpractice, let's examine Professor Susan Sabb Fortney from Texas A&M University and the conclusions from her legal research paper, Mandatory Legal Malpractice Insurance: Exposing Lawyers' Blind Spots.
"Given the compelling arguments in favor of insurance and the fact that the majority of lawyers in private practice carry insurance, the question is why more states have not mandated insurance for lawyers in private practice have. One explanation may be that lawyers and decision makers may be suffering from ethical blind spots on both the individual andorganizational levels. Findings from the burgeoning field of behavioral ethics provide insights on how the lawyers and judges may not clearly see the ethical dimensions of conduct and decisionsrelated to malpractice insurance."
"We all make mistakes. We are distinguished as professionals by the manner in which we handle mistakes and treat those we injure. If members of the bar refuse to see or recognize theirresponsibility to injured persons and the profession, it is the role of the insured lawyers to advocate for malpractice insurance to help uphold the high standards of the legal profession. If lawyers refuse to deal with their blind spots and see the ethical dimensions of financial accountability, we do not deserve to be members of a protected profession."
"Ethical blindness also comes into play at the organizational level, when peers andorganizational leaders fail to accurately assess the unethical behavior of individuals. In the context of lawyering this can occur within firms and bar groups when other lawyers ignore unethical conduct of individuals."
These ethical blind spots were clearly on display at the BOG's meeting in Yakima in May 2019. When they voted not to recommend the draft rule to the Supreme Court, one governor stated, "I oppose anything that's mandatory," while another said, "We should drop this issue entirely. I think we do our members a huge, huge disservice by continuing this dialogue in the face of the overwhelming opposition we have heard." While another governor publicly tweeted, "Access to justice concerns convinced me to vote no." This is the complete opposite of the Task Force findings.
Still more troubling, a day after receiving OPMA training from the Office of The Attorney General, a governor lobbied the president of the WSBA BOG and tried to stop the only member of the public, and a victim of malpractice, from speaking to advocate for public protection, saying it was "inappropriate."
The findings of the Task Force are unanimous, crystal, and unambiguous. This is the most important public protection issue that has most likely ever come before the BOG, protecting all the people of Washington equally and affecting all attorneys equally. It's fair and responsible. The Supreme Court has already suspended the BOG from making any WSBA bylaw changes. The BOG has now demonstrated it is simply incapable of discharging its prima facie duty to protect and serve the public first and uphold the missions of both the WSBA and the Supreme Court. Full suspension should be considered with the executive leadership of the WSBA reporting directly to the Supreme Court until the Court can thoroughly review the governance structure and be inclusive of multiple public members on the BOG. This action is warranted and justified for the administration of justice, public protection, and promulgating the missions of the WSBA and the Supreme Court.
Conflicts Resolved:
1. Antitrust exposure: Currently, there are just over 850 Limited Practice Officers and Limited Licensed Legal Technicians practicing in the state of Washington. As their name states, they are limited in the practice area of the law and are limited in legal services afforded to clients. They are deemed legal professionals of a lesser degree, and yet by APR rules 12 (F)(2) and 28 (I)(2) they are compelled to be financially responsible and carry professional liability insurance as a requirement to practice compared to attorneys, who are legal professionals of a higher degree, and are not required to carry insurance and be financially responsible.
Clearly this actively creates an enormous anti-competitive environment and opens the WSBA and the Supreme Court to a high degree of antitrust exposure. This of course is easily resolved by requiring all licensed professionals and providers to carry insurance, which allows for a level playing field while fostering marketplace competition, consumer confidence and most importantly public protection.
2. Access-to-justice issue: As the Task Force has repeatedly stated, the lack of malpractice insurance is fundamentally an access-to-justice issue. When clients seek attorneys for help, they have already been harmed and look to the courts for relief. When that same attorney victimizes their clients, they are harmed a second time, and when they are unable to pursue legitimate malpractice claims, they are harmed for the third time. Additionally, we know that access-to-justice issues disproportionately affect low-income households and people of color. Seven in ten low-income households face legal issues, and the number of issues per household has tripled from 3 to 9 since 2003.
3. Ethical blind spot, a GR-12 problem: As Professor Susan Sabb Fortney has concluded and the actions and comments from the BOG have confirmed, ethical blind spots do exist and are dangerous to the public, administration and access-to-justice. Failure to recognize these ethical blind spots puts the Supreme Court in direct conflict with GR-12. GR 12.1, legal professionals must be regulated and it must be for the protection of the public.
Rationale, a Clear Argument for Protection:
There are two options: A. Adopt the draft rule, a proactive approach; or B. Reject the draft rule, a do-nothing approach.
The clean solution is one that resolves all three conflicts and upholds GR-12. GR 12.1 promotes the administration and access-to-justice so everyone can be seen equally under the law.
To arrive at a conclusion, one needs only to take a simple utilitarian approach: the greatest amount of good for the greatest number of people. Option A. favors the over 7.5 million people of Washington State.
Option B. favors the over 2,752 uninsured attorneys in Washington State. We can now make this logical substitution with the following statement:
Option A. resolves all three conflicts, upholds GR-12. GR 12.1 promotes the administration and access-to-justice so everyone can be seen equally under the law.
Option B. resolves all three conflicts, upholds GR-12. GR 12.1 promotes the administration and access-to-justice so everyone can be seen equally under the law.
It's clear that Option A. offers a true premise and a true conclusion while Option B. is simply false.
A hearing is not recommended.
E. Expedited Consideration:
Given the fact that there are over 2,752 attorneys uninsured, knowing that there are tens of thousands of exposed clients, and that there is a legal blind spot when it comes to malpractice insurance, having plenary authority and being plainly responsible, expedited consideration is requested and fully warranted. The Supreme Court has the power to act and the power to protect and that is precisely why GR-9 Clause E is relevant and should be fully exercised. On behalf of the 7.5 million people of Washington State, victims of malpractice and Equal Justice Washington, we pray for relief.
F. Supporting Material:
Amended APR-26 Draft Rule
Pages 1-10 Arguments for malpractice insurance from Professor Susan Sabb Fortney's legal research paper, Mandatory Legal Malpractice Insurance: Exposing Lawyers' Blind Spots.
Pages 11-13 Conclusions for malpractice insurance from Professor Susan Sabb Fortney's legal research paper, Mandatory Legal Malpractice Insurance: Exposing Lawyers' Blind Spots.
Pages 13-24 WSBA Mandatory Malpractice Insurance Task Force Recommendations and Conclusions.
Reviser's note: The typographical errors in the above material occurred in the copy filed by the SSC and appear in the Register pursuant to the requirements of RCW 34.08.040.
APR 26
(a) Unless exempted under section (b) of this rule,Eeach active lawyer member of the Bar who is to any extent engaged in the private practice of lawshallmust certify annually in a form and manner approved by the Bar by the date specified by the Bar (1) whetherthat the lawyer is covered byengaged in the private practice of law; (2) if engaged in the private practice of law, whether the lawyer is currently covered by professional liability insurance at a minimum limit of $250,000 per occurrence/$500,000 annual aggregate;and(3) whether the lawyer intends to maintain insurance during the period of time the lawyer is on active status in the current licensing periodengaged in the practice of law; and (4) whether the lawyer is engaged in the practice of law as a full-time government lawyer or is counsel employed by an organizational client and does not represent clients outside that capacity;.
(b) A lawyer is exempt from the coverage requirement of section (a) of this rule if the lawyer certifies to the Bar in a form and manner approved by the Bar that the lawyer is not engaged in the practice of law or the lawyer's practice consists exclusively of any one or more of the following categories and that the lawyer does not represent any clients outside of that service or employment:
(1) Employment as a government lawyer or judge;
(2) Employment by a corporation or business entity, including nonprofits;
(3) Employee or independent contractor for a nonprofit legal aid or public defense office that provides insurance to its employees or independent contractors;
(4) Mediation or arbitration; and
(5) Volunteer pro bono service for a qualified legal services provider as defined in APR 1 (e)(8) that provides insurance to its volunteers.
(c) Each active lawyer who certifies coverage under section (a) of this rule must,reports being covered by professional liability insurance shall certify in a form and manner prescribed by the Bar, notify the Bar in writing within 3010 days if the insurance policy providing coverage lapses, is no longer in effect, or terminates for any reason.
(b)(d) The information submitted pursuant to this rule as to the existence of coverage will be made available to the public by such means as may be designated by the Bar, which may include publication on the website maintained by the Bar.
(c)(e)Any activeIf a lawyer of lawwho is required to certify coverage under section (a) of this rulewho fails to comply with this rule by the date specified by the Bar or fails to maintain the coverage required throughout the licensing period, the lawyer may be ordered suspended from the practice of law by the Supreme Court until such time as the lawyer complies.and the Court orders the lawyer's reinstatement to active status.
(f) A lawyer who has certified the existence of professional liability insurance coverage under section (a) of this rule must provide proof to the Bar, upon request, of the existence of the certified coverage, including a copy of any applicable insurance policy and other relevant information. A lawyer who has not complied with a request under this section for more than 30 days may be ordered suspended from the practice of law by the Supreme Court until such time as the lawyer complies with the request and the Court orders the lawyer's reinstatement to active status.
(g) Supplying false information in a certification under section (a) or (e) of this rule or in response to a request for information under section (f) of this rule, or failure to provide timely notice under section (c) of this rule, mayshall subject the lawyer to appropriate disciplinary action.