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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.
PART IV : CORPORATE RESPONSIBILITY
OF THE PROFESSION
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.
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