The Gazette 1978

Professional Indemnity Insurance

By MICHAEL BROOKS

I would like to divide my talk into three main headings:

(1) International;

(2) European; and

(3) Irish.

Of necessity there will be some over-lapping, but this is

hard to avoid.

International

About fifteen to twenty years ago Mr. Ralph Nader

came on to the American scene, fired with the zeal of

youth he was going to get a better deal for the American

public. This is now known as consumerism. There is no

need here to go into what happened as it is well known to

all of you, but the stone that Mr. Nader threw into that

American pond produced ripples that have apread far

beyond the shores of the U.S.A.

Nader's initial attack was against large manufacturing

companies and defective or shoddy goods, but the ripples

have now gone far beyond this and spread to professional

firms.

This started about ten to fifteen years ago when the

large U.S. accounting firms began to get numerous law

suits against them with ever increasing settlements against

them.

Last year, we had the settlement in the Equity Funding

debacle which resulted in three accounting firms having to

pay $39 million between them (the amounts paid by each

firm were not disclosed).

In the "U.S. Financial" case last month there was an

award against one of the big eight accountants in the

California State Courts of $30,000,000 with a Federal

Court case still to come. Rumour has it that a law firm

also involved in the State Court case settled out of court

for somewhere between six and eight million dollars.

Now you may well say that these figures are fine in the

U.S.A. but they could never happen in Ireland. I would

agree that there are many factors which in the U.S.A.

lend themselves to large awards. Factors such as class

actions and lawyers working on a contingency fee basis

which are not permissible here in Ireland, at least not yet.

The government is actively encouraging foreign

companies to open up in Ireland and through the efforts

of the I.D.A. has had some very notable successes with

companies; for example, there were over 200 U.K.

companies and 200 U.S. companies operating in Ireland

at the end of 1976.

What happens, may I ask, if a solicitor makes a

mistake with one of these clients? I will deal with possible

answers when I get on to the third part of my talk.

Staying on the international scene and turning to

lawyers in other countries, there are more and more

countries turning to compulsory insurance. I believe that

the first compulsory lawyers' insurance scheme was for

the Upper Canada Law Society (Ontario). This was

quickly followed by all the rest of Canada except Quebec.

In 1975 in England and Wales the Law Society

brought in compulsory insurance. Northern Ireland and

Scotland have now followed suit. This year sees the State

of Victoria introduce a compulsory scheme and all the

rest of the States in Australia have indicated that they will

follow suit.

The reasons for compulsory insurance in England and

Wales was strong government pressure to protect the

public. There were a few cases of "widows and orphans"

unable to collect from solicitors who were negligent as

either there was no insurance or the insurance was

avoided for one reason or another. Much nearer home

there was the case in New Ross which received so much

national publicity.

The current Law Society insurance cannot be voided

for any reason. If this scheme had not been put into effect

the government (both Conservative and Labour) made it

quite clear that they would bring in their own solutions.

Once again we see how consumerism is very popular

with governments — it gets votes.

There is one very significant difference between Upper

Canada and Victoria where they use knowledge obtained

from insurance claims for disciplinary purposes, whereas

Continued from page 32

sionalism accordingly. It is served by the media in passing

judgment on the powerful. Justice Steward finds historic

roots for this role: "The British Crown knew that a free

press was not just a neutral vehicle . . . Instead, the free

press meant organized, expert scrutiny of government.

The press was a conspiracy of the intellect, with the

courage of numbers. This formidable check on official

power was what the British Crown had feared — and

what the American founders decided to risk".

In our day the media are pursuing more than the "eyes

and ears" role of an earlier era. They have become a

"special prosecutor" searching out the evidence concern-

ing the doings and failings-to-do of major American in-

stitutions. This is a righteous as well as heady function

that members of the fourth estate will not likely disclaim

in the near future. We lawyers, closely tied to the third

branch of government as well as to powerful clients, are a

ubiquitous target.

There are many more opportunities than risks in the

pressure for opening up the Bar. For one thing, the profes-

sion's record is far from bad. Much needs to be examined

and restructured, but going public can only help those ef-

forts. No one expects miracles or total consensus, but the

public has the right to expect professional exposition of is-

sues. This is what attracted the 340 media representatives

to the recent Annual Meeting.

Good lawyers have no trouble with the idea of an open

profession. For the most part, they've been struggling for

years against the apathy of fellow professionals, including

that of a few partners obsessed with recording billable

hours. They also have encountered resistance from some

hidebound law professors and judges. These lawyers

know better than the critics the problems and failures of

the profession. But they also believe in its potential and

are committed to its development. They recognize that

going public can only help.