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. To learn more, visit njsba.com.

Supreme Court sets sights on mandatory malpractice insurance disclosure

The Administrative Office of the Courts is poised to propose formal adoption of new Rule 1:21D, creating an obligation on attorneys in private practice to file with the clerk of the Supreme Court a certificate of insurance with information on insurance coverage. The proposed rule is a result of recommendations from a report issued by the Supreme Court Ad Hoc Committee on Attorney Malpractice Insurance, issued in 2017. The New Jersey State Bar Association (NJSBA) urged the Supreme Court not to adopt a mandatory insurance requirement or mandatory disclosure requirement for attorneys in comments submitted on the report in Jan. 2018.

Three specific issues were considered by the committee: whether to require malpractice insurance, whether to require reporting of malpractice insurance, and whether to require attorneys to affirmatively disclose to clients if they lack malpractice insurance. The committee rejected the notion of mandatory malpractice insurance, citing to the exceptional burden in light of the current insurance market. The committee also declined to impose a requirement that attorneys affirmatively state whether or not they had malpractice insurance because of “the absence of evidence that the requirement is necessary or will resolve any demonstrated problem in connection with the ability of consumers to obtain quality legal services or to have recourse available in the event of negligent representation.”

“There is no evidence that the public is demanding [mandatory insurance or mandatory disclosure] requirements or that great harm is being caused by their absence,” said then NJSBA President Robert B. Hille. “On the contrary, there is evidence of very real harm and hardship that could arise should the Court effectuate such requirements for both the public and the profession.”

Hille, who also served on the committee that created the report, pointed out that such disclosure should not include coverage amounts “for a variety of reasons and may create false expectations on the part of the consumer.” He recommended any disclosure requirement be coupled with safeguards, including a prohibition of an attorney's disclosure from being used as a standard for civil liability or the basis for a malpractice claim.

The Administrative Office of the Courts outlined the next steps to roll out the requirement to file a certificate of insurance, which will include online access to attorney malpractice insurance coverage information. Information required to be disclosed upon adoption of Rule 1:21-1D includes basic policy information, any policy amendments, renewals and terminations.

No date has been set on the requirement to file certificates of insurance. The NJSBA continues to advocate for passage of A-4880 (Quijano/Wimberly), which would bring professional malpractice claims under a two-year statute of limitations. The volatile professional malpractice insurance market for attorneys has been blamed on New Jersey's six-year statute of limitations and the unique fee-shifting provision, which is only recognized in New Jersey and only for attorneys.

In testimony before the Assembly Judiciary Committee weeks ago, NJSBA President John E. Keefe Jr. urged legislators to consider the impact on consumers. “Pricing lawyers out of the insurance market is really what hurts consumers,” said Keefe.

A-4880 must go before the full Assembly for a vote, and then to the Senate for consideration. The association continues to monitor this bill and advocate for its passage.