Not many people would agree to have their roof replaced on their house, or a tree removed from their yard, without requesting proof of insurance — but, amazingly, businesses almost never make the same request of their lawyers. As a result, the fate of huge deals and major litigation can rest in the hands of uninsured, or underinsured, lawyers.
Most consumers of legal services are shocked to learn that in most states, lawyers are not required to be insured. Why not? Perhaps because lawyers govern themselves. The State Bar of Georgia, as with most other state bar associations, is the entity that determines whether membership requires professional liability insurance — and the membership of the State Bar of Georgia is comprised entirely of lawyers.
Up until this point in the history of the Georgia legal profession, the State Bar has never required lawyers to be insured, but that may change. Former State Bar President Kenneth B. Hodges, III, now a Georgia Court of Appeals judge, knew that it was detrimental to legal consumers and spearheaded an aggressive effort to change the rule. The initial effort hit a roadblock when many lawyers opposed the initiative, but a committee Hodges began, and on which he still serves, continues to study the issue and is taking a vote this summer. By all indications, the vote is likely to be close. Why? Because only lawyers are deciding.
On the other hand, those most harmed by uninsured lawyers are the clients — legal consumers. Unfortunately, businesses and other legal consumers don’t have a seat at the table for the decision. They have been left out of the conversation entirely while lawyers debate lawyers about whether they should be required to carry professional liability insurance. Many legal consumers, on the other hand, wrongly assume such insurance is required.
Why do some lawyers oppose an insurance requirement? Well, there’s no question that insurance can be expensive (though it varies by practice area and can actually be quite reasonable for some). Nonetheless, other businesses consider adequate insurance simply part of the overhead of doing business. Lacking insurance to cover mistakes is detrimental to all involved: the lawyer whose assets can be at risk and, most importantly, the client who can be faced with an uncompensated loss.
In my experience, this issue is, frankly, not a common concern for clients and businesses working with large law firms. Such firms are overwhelmingly insured, and sufficiently so. Still, it makes sense to request the declarations page of the firm’s insurance policy annually should a claim arise.
The real harm comes to those working with smaller firms and solo practitioners. While there are no available statistics on the number of uninsured lawyers in Georgia (the data is not maintained by any institution, not even the State Bar of Georgia), I believe the percentage is estimated at around 20% to 35%.
If a mistake by an uninsured lawyer causes a loss to your business, it can be extraordinarily difficult to recover. Just ask any collections attorney. A colleague of mine recently mentioned that collecting on a judgment against an attorney is one of the toughest collection scenarios they face.
There’s also a world of difference between making a claim against a negligent lawyer’s insurance and having to sue a negligent lawyer to get a judgment. While an insurance claim can take weeks or months, a lawsuit can take years and cost six figures or more.
Protect your business; protect yourself. Ask your lawyer for proof of insurance. If clients won’t hire lawyers who aren’t insured, perhaps that will help solve the problem of uninsured lawyers.
Linley Jones is Founding member of The Linley Jones Firm, PC, a law firm specializing in legal malpractice. https://www.bizjournals.com/atlanta/news/2020/08/10/think-your-lawyer-is-insured-heres-how-to-find-out.html