The Gazette 1971

of South Australia has negotiated a group insurance scheme for its members on somewhat similar lines to the New South Wales scheme. Group Schemes The value of these society sponsored group schemes is primarily, that they secure better terms for members than they can obtain individually from insurers, but it is also of some importance that they give members uniform policy conditions and unite them in a common purpose of maintaining their professional insurance cover on the best terms obtainable. It is conceivable that they will also facilitate the introduction of a scheme of compulsory insurance if that should become a desirable objective. Compulsory Negligence Insurance Compulsory negligence insurance for lawyers is little known. Dr. Hanson says: "In Denmark it is being deliberated at present making liability insurance com- pulsory for all Danish lawyers." In Austria, where it is estimated that the percentage of lawyers not insured is "in all probability less than 50 per cent", compulsory liability insurance exists for public accountants and tax advisers, notwithstanding which Dr. Binder doubts the efficacy of a compulsory insurance scheme for lawyers. The lawyer in Germany "is required to insure a reason- able amount by the Rules of Practice of his professional body". The Swiss correspondent referred to "the solution of the Paris Bar, where all lawyers are automatically insured". Lacking a report from France, I can do no more than mention the reference. In Australia, negli- gence insurance is a matter for the individual, with the sole exception that in Tasmania every practising soli- citor is required by statute to pay an annual sum which gives him a negligence insurance cover of $50,000. The almost complete absence of any form of compul- sory insurance reflects some discredit on the legal pro- fession. It may be, as Mr. F. Korthals Atles suggests, that "there are certain clear disadvantages attached to a collective system of professional liability insurance, for instance the increase of claims it would lead to". No doubt a large proportion of uninsured lawyers comprises the less careful members of the profession and might increase the claims experience of insurers if brought under the cover of insurance, but the reverse might be found to be the result. In any event, does not the profession owe some duty to the public in this matter? It is time that the legal profession became more conscious of the importance of this form of insurance to prattitioners and, more espe- cially, to their clients. Consideration should be given immediately to the institution of a programme of re- search at provincial, national and international levels to obtain information concerning negligence insurance of lawyers—its cost to insurers, the effectiveness of the cover provided under existing forms of policy, the need for and advantages (if any) of the "excess" provisions (self insurance in stated amounts), the deficiencies inherent in the low top limits imposed by most insurers and the possible effect of bringing into a negligence insurance scheme all lawyers who are at present unin- sured. No doubt there are other aspects of the subject which might profitably be included in such a pro- gramme. Division 3—Possible Alternatives The suggestion that alternatives to the present forms of negligence insurance should be sought by lawyers

implies that grounds for dissatisfaction exist. This can- not be asserted positively on the basis of the scanty information elicited by the questionnaire. However, most of the specific references to existing negligence insurance are unfavourable and indicate a desire for better policy conditions, as well as a fairer basis for fixing premium rates. The Law Society of New South Wales, in its research of the subject, considered the possibility of providing negligence insurance for its members, with re-insurance as a protection for the fund to be established by mem- bers' contributions. The impediments to such a scheme being set up included : (1) the high cost of re-insurance, (2) an aversion to compulsion as a feature of the scheme, (3) the upper limit of insurance cover which would have to be fixed. It may be thought unreal to contemplate the possi- bility of government participation in a professional negligence insurance scheme for lawyers; but in Aus- tralia there is a real basis for the idea, at least so far as solicitors are concerned. In New South Wales (as in most other Australian states) solicitors are now required to deposit in special accounts with the Law Society half of the lowest balance of money in their trust accounts in any year. Interest earned by the deposits is allocated to purposes approved by the Attorney-General, which includes support of the Society's Fidelity Guarantee Fund and financing a legal aid scheme. It is probable that, as time goes on, the annual interest will be sub- stantially in excess of the amount required annually for the purposes to which it is now being allocated and that other avenues of expenditure will be sought. Individual practitioners have proposed that, when this stage is reached, allocations might be made to a fund set up by the Law Society as the nucleus of a professional negli- gence insurance scheme; but the Law Society itself has not discussed the proposal. It is not thought that any other form of government participation is a practical possibility. It is generally accepted by lawyers that the legal profession has a corporate responsibility to the public to maintain and improve standards of competence of its members. Legal education is a constant preoccupa- tion of many law societies and those whose members include solicitors, or attorneys, are concerned to protect the public against malpractice by their members, in- volving dishonesty or improper conduct. What a client may lose through his lawyer's dishonesty is money. The same commodity may be lost through the lawyer's negli- gence, coupled with his inability to make good the loss because of inadequate negligence insurance, or insuffi- ciency of his own assets, or a combination of both. There are thus two aspects of professional negligence of lawyers which are of particular concern to the legal profession as a whole and to the law societies which represent it, namely : (a) its consequences to the client affected, and (b) the harm it does to the prestige of the profession. As to (a), it is apparently not known what the inci- dence of un recompensed losses to clients might be in such cases. If it were serious, the conscience of the profession should at least be moved to enquire whether this is a proper state of affairs. 149 PART IV : CORPORATE RESPONSIBILITY OF THE PROFESSION