Capitol Report

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March 25, 2019

This is a status report provided by the New Jersey State Bar Association on recently passed and pending legislation, regulations, gubernatorial nominations and/or appointments of interest to lawyers, as well as the involvement of the NJSBA as amicus in appellate court matters.

Professional malpractice bill voted out of Assembly Judiciary Committee

In a standing-room-only committee hearing, the Assembly Judiciary Committee voted to pass A-4880 (Quijano), the professional malpractice bill that would change the statute of limitations on professional malpractice claims for accountants, architects, attorneys, engineers and land surveyors to two years. The bill was drafted by, and is a priority of, the New Jersey State Bar Association as a means to make malpractice insurance more accessible and affordable to New Jersey professionals, ensuring consumers are protected when services go awry.

“This bill is critically important,” said NJSBA President John E. Keefe Jr. “It will improve a broken insurance market, provide a level playing field for licensed professionals, and, of critical importance, it will provide substantial and better protection for New Jersey consumers than currently exists today.”

Currently, New Jersey attorneys have a six-year statute of limitations, far longer than their counterparts in neighboring states. The NJSBA testified to the forum shopping that leads to increased claims and increased malpractice insurance costs because of the lengthier timeframe and the fee-shifting provision, also known as Saffer fees.

Support for the bill was widespread, including county bar associations, affinity bar associations, New Jersey Society of Certified Public Accountants, American Institute of Architects, New Jersey Society of Professional Land Surveyors, New Jersey Society of Professional Engineers, and others. Those who spoke in favor of the bill cited the rising cost of malpractice insurance, which impacts consumers directly—especially in solo and small businesses.

Speaking on behalf of the Hispanic Bar Association and the Hudson County Bar Association, NJSBA President-Elect Evelyn Padin, herself a small-firm practitioner, pointed out the number of Hispanics who practice in solo and small firms. Similarly, Asian Pacific American Lawyers Association President Jack Chan testified that Asian Americans are the largest growing group in New Jersey; however, they are less likely to become partners in large law firms, judges and executives and, therefore, tend to become solo and small-firm practitioners.

USI Affinity Senior Vice President and Professional Liability Practice Leader Michael Mooney provided a detailed explanation of the insurance market in New Jersey.

“New Jersey has less competition, more restrictive language around legal malpractice, less carriers, and the reason they have less carriers is because the carriers’ ability to make money in New Jersey is very hard. And that’s based on two things—the statute of limitations and the Saffer fees,” said Mooney. He explained why New Jersey’s malpractice base rates start out higher than neighboring states by breaking down the claims process in evaluating malpractice claims.

Mooney illustrated the malpractice disparities from state to state: A solo practitioner in Pennsylvania or New York who practices only family law pays nearly half what a New Jersey practitioner would pay. Similarly, a firm that only handles personal injury in New Jersey pays double that of a Pennsylvania firm and 20 percent more than a New York firm.

Opponents of the bill were the New Jersey Association for Justice; New Jersey Citizen Action and Ben Wasserman, an attorney who practices legal malpractice. They argued that the bill would hurt consumers and that Saffer fees remediate the harm experienced by a client who has suffered as a result of legal malpractice.

William Isele, a past president of the Middlesex County Bar Association, pointed out that the Saffer v. Willoughby case has been misinterpreted from the holding in that case, where the Supreme Court commented several times that the underlying case was “unique and unusual.” He further pointed to the protections afforded through rules imposed on attorneys, including the fee arbitration process.

The NJSBA continues to advocate for the bill’s passage.