Supreme Court Requires Disclosure of Lack of Malpractice Coverage

On December 30, 2005, the Supreme Court of Pennsylvania adopted new Rule 1.4(c) of the Pennsylvania Rules of Professional Conduct, regarding communication with clients, which requires lawyers who do not have professional liability insurance coverage to disclose this fact to clients in writing.

The rule states that a lawyer in private practice must inform a new client in writing if the lawyer does not have professional liability insurance of at least $100,000 per occurrence and $300,000 in the aggregate per year, subject to commercially reasonable deductibles, retention or co-insurance, and shall inform existing clients in writing at any time the lawyer’s professional liability insurance drops below either of those amounts or the lawyer’s professional liability insurance is terminated.

Lawyers and firms who do have the levels of insurance specified in the rule are not required to make any disclosure. The requirement does not apply to lawyers who are employed full-time as government or corporate attorneys, or to lawyers who do not have private clients.

The comments to the rule include suggested language for disclosure when required. Deductibles, retentions or co-insurance offered from time to time in the marketplace for professional liability insurance for the size of firm and coverage limits purchased will be deemed to be commercially reasonable.

The rule change is effective July 1, 2006. The effective date of the requirement was set six months in the future in order to afford lawyers who do not have insurance an opportunity to acquire coverage.

The full text of the amended rule may be read here.