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California Wants Malpractice Coverage for All, Except Heller

For some time, law practice expert Ed Poll has been blogging about the California Bar's efforts to force lawyers to procure malpractice insurance, most recently by requiring lawyers to disclose to clients their lack of malpractice insurance. Poll's primary objection is that the state needs to ensure that lawyers can find affordable insurance plans before making them mandatory.

Given California's strong interest in lawyers having coverage, it's ironic that Bankruptcy Judge Dennis Montali won't let the defunct Heller Ehrman purchase three years of malpractice insurance for $10.2 million, according to The Recorder. Heller wasn't able to buy it prior to filing for bankruptcy because its accounts had been frozen. Montali found that allowing the purchase would significantly dilute creditors' claims. In addition, the judge noted that bankruptcy puts a stay on all suits, including legal malpractice. Incidentally, the court's decision differs somewhat from the outcome with regard to another defunct firm, Deier LLP. As The Am Law Daily reported, a bankruptcy judge allowed Dreier to spend some money to keep the firm's malpractice insurance policy in place temporarily.

Posted by Carolyn Elefant on January 29, 2009 at 11:26 AM | Permalink | Comments (0)

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