Litigation insurance costs may be passed to clients.

After an intense debate, the Board of Governors has decided it's permissible for attorneys to ask their clients to pay for a new type of insurance that fundamentally alters the risk equation in contingency fee cases.

"Litigation cost protection" insurance reimburses an attorney up to the insured amount of costs advanced to the client only if the case goes to trial and there is zero recovery. Promoters say it gives sole practitioners and smaller firms the ability to go after deep-pocket defendants.

At its January 26 meeting in Tallahassee, the board voted 23-17 to allow attorneys to pass along the cost of the premiums to their clients, but only with informed consent and after extensive disclosure.

Under the policy at issue, premiums are 7 percent of whatever amount of coverage the attorney requests, or $17,500 if the attorney opts for the maximum coverage of $250,000.

Critics argued it doesn't pass the "smell test" because the attorney is the only direct beneficiary. But supporters counter that there's nothing wrong with asking a client to pay for a product that puts more experienced lawyers and expert witnesses within their reach.

Board member Dennis Kainen argued the insurance gives consumers greater access to litigation specialists, including medical malpractice experts who have just struck out on their own and can't finance large and complex cases.

"This is a situation where you can have your cake and eat it, too. You can serve your client by taking the case to trial because you can afford $250,000 to beat up that insurance company that doesn't want to pay," Kainen said. "And, you can help yourself and make a little bit of money too, because we are in a profit-making business, serving the public."

The board vote reversed a Professional Ethics Committee decision last fall that forbade passing along the cost.

Instead, Bar staff has been directed to issue an advisory opinion that calls for tight guardrails and reflects the deep concerns expressed by many board members, including several members of the Board Review Committee on Professional Ethics. The BRCPE voted 4-3 to allow the pass through, but also with certain conditions.

The board's final proposed opinion calls such arrangements "a close question because the circumstances described create potential conflicts of interest between the lawyer and client throughout litigation."

It goes on to list eight conditions, including that the lawyer makes "an objectively reasonable determination...