Texas Debates Whether Attorneys Must Disclose Legal Malpractice Insurance Coverage

Today, a Supreme Court of Texas task force is set to vote on a proposal that would require Texas lawyers to disclose to potential clients whether the lawyers carry legal malpractice insurance.  Earlier this week, California took another step to adopting a similar requirement.

As a legal malpractice attorney, I think the proposal is a great idea.  Potential clients have the right to know whether the attorneys they are hiring have the financial ability to make them whole should the attorney make a mistake.  As attorneys, we encourage the public to make sure that their tree trimmers, contractors, mechanics, etc are bonded and insured before they’re hired.  Certainly, clients of attorneys would be interested in the same information.

I also think that the duty to disclose the lack of malpractice insurance may exist due to the Texas Deceptive Trade Practices Act.  A business (including lawyers) violates the DTPA when the business fails to disclose information concerning services which was known at the time of the transaction if the failure to disclose was intended to induce the consumer into a transaction into which the consumer would not have entered had the informaiton been disclosed.  Because insurance is important, I think there’s a potential duty to disclose the lack of insurance under this statute.

However, it is not a slam dunk.  There are several respected commentators that are against these types of rules.  For more information on those positions, you can check out the following:

• ABA Net 2003 pro/con article
• Susan Cartier Liebel
• Ed Poll