Regulators at the Margins: The Impact of Malpractice Insurers on Solo and Small Firm Lawyers

Abstract

Liability insurers often informally regulate the behavior of their insureds through the underwriting process, premium pricing, contract design, and risk management practices. This Article explores whether lawyer professional liability (“LPL”) insurers effectively regulate the behavior of solo and small firm lawyers in ways that encourage responsible conduct. The Article draws on interviews of insurance industry executives, risk management counsel, and insured lawyers, as well as insurer documents and surveys of lawyers, to explore the impact of LPL insurers on the work lives of solo and small firm lawyers. The research reveals that LPL insurers appear to regulate the behavior of solo and small firm lawyers in limited ways. The Article explores the reasons why this is the case. It also discusses solo and small firm lawyers’ attitudes toward malpractice actions, which shed additional light on the likely efficacy of insurers’ efforts to regulate the behavior of these lawyers. The Article identifies a much more effective regulator of some lawyers’ conduct — title insurers — and explains how this regulation occurs and the conditions that make effective regulation possible. It suggests some steps that LPL insurers could take to further encourage solo and small firm lawyers to engage in more responsible behavior.

Keywords: Lawyers, Legal Profession, Law & Society, Malpractice, Insurance