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

Abstract

Solo and small firm lawyers comprise more than three-fifths of all lawyers in private practice and are disproportionately subject to discipline sanctions. Sociolegal scholars have long sought to identify the factors that influence the behavior of these lawyers. Research suggests that lawyer professional liability (“LPL”) insurers regulate the behavior of large firm lawyers through the underwriting process, premium pricing, contract design, and risk management practices in order to reduce the risk of loss. This article explores whether LPL insurers also regulate the behavior of solo and small firm lawyers in ways that encourage responsible conduct. The articles draws on interviews of insurance industry executives, risk management counsel, and insured lawyers, as well as surveys of lawyers and insurer documents, to explore the impact of LPL insurers on the work lives of solo and small firm lawyers. The research reveals that unlike LPL insurers of large law firms, 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 about 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 lawyer 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.