Post-BARF Malpractice Insurance Troubles
I just read a disturbing article in the ABA's September-October 2005 issue of Bar Leader discussing post-BARF malpractice insurance issues for bankruptcy practitioners. In "Attorneys Concerned about Bankruptcy Reform Provisions,"
Carl Younger, President of Lawyers Mutual Liability Insurance Company of North Carolina, notes two potential malpractice insurance issues that may arise out of BAPCPA. The first involves the new fines and sanctions that can be imposed against attorneys. Younger notes that these fines and penalties will not be covered under most malpractice policies because most such policies exclude "fines, penalties, or special damages . . . ."
Younger notes a second and potentially much more troubling issue involving the new debt relief agency provisions. Younger notes that since most malpractice policies "are limited in their coverage to the practice of law . . . [c]overage may be questioned for actions taken as a 'debt relief agency' when compared to normal coverage for 'practicing law,' he says. It is distinctly possible that [an attorney] would be required to purchase another policy to cover liability of the 'debt relief agency.'"
Notwithstanding, the recent order by the United States Bankruptcy Court for the Southern District of Georgia holding that attorneys practicing before that court will not be considered debt relief agencies, practitioners may want to talk to their malpractice carriers to determine how the new law may affect their coverage.
