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Insurers Don’t Really Care if Big Law Lawyers Pass the Bar Exam

July 23, 2020, 8:55 AM

Welcome back to the Big Law Business column on the changing legal marketplace written by me, Roy Strom. This week, we look at why eliminating the bar exam wouldn’t faze insurers who provide professional liability coverage for Big Law firms, even as chaos surrounding the test is causing plenty of controversy across the country. Sign up to receive this column in your inbox on Thursday mornings.

When does somebody become an attorney?

Mikayla McIntyre, a 2020 graduate of the University of Texas Law School, knows the typical answer: after the person passes the bar exam, earns a license, and takes an oath.

McIntyre just doesn’t know when that will happen in her case. She had been scheduled to take the uniform bar exam in New Mexico next week, hoping to start her career as an attorney at a mid-size firm in Texas this year—then Covid-19 happened. The job offer has since evaporated, and the state’s bar exam has been pushed back at least three months.

That leaves McIntyre unsure how she’ll complete the final byzantine steps on the checklist of becoming a licensed lawyer. She’s also questioning whether the test for lawyers-in-training is really necessary.

“There is this preoccupation that the bar exam is the only method to test competency,” McIntyre said in an interview. “Something like an apprenticeship in the field you’re going into is actually a better way to test competency.”

For law school graduates, state bar regulators, and law firms, the pandemic has raised a new set of urgent questions around the definition of an attorney, and the bar exam’s role in determining who gets that job title. Some have even questioned whether the test is fundamentally biased and unfair.

When and how will law school graduates be able to get approved to start practicing law? That depends largely on the state in which they want to work.

A total of 23 states are scheduled to hold in-person bar exams next week, even as Covid-19 infection rates are on the rise in many parts of the country. I won’t try to interpret this map from the National Conference of Bar Examiners, but it’s safe to say that bar exam dates and logistics are changing constantly.

Some states have already deemed the bar exam is a risk not worth taking. Utah, Washington, Louisiana, and Oregon have made changes to allow at least some graduates to bypass bar exams and practice law via so-called “diploma privilege.” And law students in Florida, Georgia, Texas, New York, Oregon, and elsewhere are campaigning to scrap the bar exam.

For large law firms, this has caused a good amount of uncertainty. First year associates usually start in the fall after taking July bar exams. A large number of Big Law firms have already pushed start dates back to next year.

One issue on law firm leaders’ minds right now may be whether dropping the profession’s official measure of “competence” will come at any risk to them, as they hire new attorneys who haven’t taken the exam. I asked some of the experts most familiar with law firm liability, those who work at insurance companies offering policies to protect firms from professional liability claims.

Turns out, these risk experts are not really bothered by the idea of Big Law first years practicing without a passing bar exam score under their belts. The test isn’t much of a competence barometer in Big Law, where firms already closely supervise the work of their newest associates, limiting against claims of malpractice or unauthorized practice of law.

“Generally speaking, we are not overly concerned about privilege diplomas with large law firms and don’t anticipate any policy changes with respect to large law firms,” said Christopher Gomprecht, national practice leader for lawyers’ professional liability at Allianz Global Corporate & Specialty, NA, said. The company provides coverage for more than half the AmLaw 100 firms.

Nancy Montroy, director of underwriting at ALAS, which provides professional liability insurance coverage for 83 of the 200 largest firms, said her company’s policy doesn’t take licensing into consideration.

“Lawyers that are temporarily licensed versus fully licensed have the same coverage under the policy,” Montroy said. “And we would expect our law firms to treat those people the same way in terms of knowing what they’re capable of doing or knowing what they need to be supervised to do.”

To be sure, ALAS wants its members taking seriously the requirements that accompany newly created temporary licensing programs in some states.

Firms hiring lawyers through those programs should assign them work and supervise them thoroughly, Mary Beth Robinson, ALAS’ senior vice president for loss prevention, said. They should document the work they’re doing and the way they’re handling staffing and supervision. And they should plan ahead to ensure continuous staffing on matters when the lawyers’ temporary license runs out.

“These are things that shouldn’t be a surprise to them, generally, but they just need to be more focused, because some of it is new,” Robinson said.

Big Law is somewhat unique in that it hires based on grades and it provides its own often rigorous in-house training that makes associates valuable from a business perspective.

“In any responsible law firm, part of the training is you don’t offer legal advice until you get admitted, and you probably don’t offer legal advice without someone more senior taking a look even when you are admitted,” said Michael Frisch, ethics counsel at Georgetown University Law Center.

Still, questions around the bar exam have real-life consequences, particularly for those 2020 law school graduates who aren’t going to a large firm with the bandwidth to closely supervise its newest hires.

McIntyre plans to start a government internship after taking an online bar exam currently scheduled in October. She said she won’t receive a full salary until she is a licensed lawyer, and she will probably move home with family as a result.

“It’s really difficult to go to an employer and ask them to hire you when you don’t even know when the bar exam is going to happen,” she said.

Worth Your Time

On Big Law Job Cuts: Bloomberg Law’s Meghan Tribe tracked the salary cuts, layoffs, and other austerity measures taken by the country’s largest law firms in the wake of the pandemic. A total of 48 out of the top 100 highest revenue firms in the country made at least some sort of cut.

On Pay Raises: On the bright side though, some Big Law firms are walking back pay cuts they instituted at the height of concern around the pandemic’s impact on their business, The American Lawyer reported.

On Big Law Growth: Haynes & Boone elected a new leader who wants to see dramatic growth in the firm’s major offices by 2025, in spite of a coronavirus crisis that’s hobbled lawyer hiring and recruitment more generally. The firm is targeting expansion in London, New York, and California, among other markets.

On Freshfields: The UK-based firm continues its hiring spree in the U.S. with the addition of former Justice Department antitrust lawyer Julie Elmer.

That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.

To contact the reporter on this story: Roy Strom in Chicago at rstrom@bloomberglaw.com

To contact the editors responsible for this story: Rebekah Mintzer at rmintzer@bloomberglaw.com; Tom P. Taylor at ttaylor@bloomberglaw.com

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