Mandatory Disclosure

Mandatory Disclosure of Professional Liability Insurance Coverage

New Mexico

On August 10, 2004 the ABA adopted a model rule requiring that all attorneys in private practice report annually to their respective state supreme courts whether they are currently covered by professional liability insurance and whether they intend to maintain such insurance as long as they are engaged in the private practice of law. The ABA model rule also provides that the respective state supreme courts will then make this information available to the public in such form as the respective courts may prescribe.

While the ABA model rules do not actually apply to lawyers in any state, those rules are generally adopted or adapted into the Ethics Rules of the individual state bars. Within one year of the new ABA model rule, 11 states had already adopted mandatory disclosure to the public, and 12 additional states were in the process of considering such rules. New Mexico was one of 5 states that had adopted a requirement that all attorneys report whether they have coverage to the supreme court, but did not provide for that information to be made public.

You may have noticed the new section 2, MANDATORY DISCLOSURE OF PROFESSIONAL LIABILITY INSURANCE, on the 2006 Dues/Licensing form you submitted to the SBNM this year. Those questions are the direct result of New Mexico's response to the new ABA model rule.

The ABA is pressing hard for adoption of the model rule in all states. In Arizona, the bar board of directors voted not to adopt any form of the model rule. The ABA went directly to the Arizona Supreme Court, and Arizona now has adopted the full ABA model rule. New Mexico's mandatory disclosure of this information to the court is widely viewed as a first step, with a public disclosure requirement likely to follow.

At the present time, by an order of the Supreme Court of the State of New Mexico adopted on July 29, 2005, the following rule applies in New Mexico.

NOW, THEREFORE, IT IS ORDERED that, pursuant to Rule 17 202(A) NMRA of the Rules Governing Discipline, the State Bar of New Mexico shall include in the annual registration statement, certification of the following  information:

  1. Whether the attorney is engaged in the private practice of law or whether the attorney is exempt from the provisions of this Order because the attorney's entire compensation derived from the practice of law is received in the attorney's capacity as an employee handling legal matters of a corporation or organization, or any agency of the federal, state, local government, or a member of the judiciary who is prohibited by statute or ordinance from practicing law;
  2. The county of the attorney's primary practice and the number of practitioners in the attorney's firm;
  3. If engaged in the private practice of law, whether the attorney currently maintains in force and effect professional liability insurance, other than an extended reporting endorsement; and, if so, disclosing to the State Bar the amount of coverage, the amount of the deductible; and the name of the insurer; and
  4. Whether the attorney intends to continuously maintain professional liability insurance during the period of time the lawyer is engaged in the private practice of law.
The order goes on to state that failure to comply with this order or supplying false information shall be treated as seriously as the failure to pay annual license fees and may lead to suspension. If certification of the required information was not received before the last day of March 2006, the Board of Bar Commissioners, through its Executive Director, will certify to the Supreme Court the names of all active members that failed to comply with the requirements of this order.

Reprinted with permission from Practicing Attorneys Liability Management Society, Inc. (PALMS)