Consumer Due Diligence: Is your Lawyer Insured?
Is your lawyer insured for negligence?, ask the PointofLaw Blog. In particular,
One of the most basic and relevant disclosures a lawyer can make to clients is whether he is covered by professional liability insurance or not. Somehow the legal profession has been slow to grasp this point, even while its members take the lead in enforcing rather more stringent consumer disclosure laws aimed at other occupations and professions. About one-third of states have decided through their regulators to require this disclosure from members of the bar, but in California -- the same state that goes to truly loopy lengths to require disclosures of essentially imaginary consumer risks -- a large body of lawyers argues that it's just too onerous."
Apparently in California, up to 20% of lawyers do not carry malpractice insurance and their clients are not aware of this.
Why is this very troubling for purchasers of franchises, business opportunities, or other distributorship agreements? These contracts usually require disclosure documents in order to allow the purchaser and his or her attorney to perform proper due diligence. But if the attorney can carry out this review without any skill or knowledge, then the California consumer is without proper recourse, ironic given that California has very strict franchising and business opportunity laws! (In Canada, it is a condition of being licensed to have at least $1 million insurance coverage.)
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