The largest since supplier of malpractice insurance to Maryland lawyers plans to issue no more new policies or renewals after this calendar year, state insurance officials have been informed.

Affiliated FM, a Providence, R.I., firm that insures about half of Maryland's 8,000 lawyers, has decided to withdraw from the market it entered only a little more than a year ago through an arrangement with the State Bar Association.

Large law firms, which have traditionally made other malpractice insurance arrangements with a variety of insurers rather than through the state bar association, will not be directly affected.

At an informal hearing here today, Charles B. Hoffman Jr., president of a Towson, Md., firm that acts as Maryland agent for Affiliated FM, said, "We've tried for six months to secure a replacement, and at the present time there are two companies interested." He declined to identify the two.

Hoffman predicted that neither will offer to take Affiliate's place unless the state legislature approves a pending measure that would place a five year time limit on the filing of malpractice claims. Now there is no time limit on the filing of such claims against lawyers.

Today's hearing on the availability of insurance for lawyers and podiatrists was held before Stanley Vinton, chief of the state's ratings and form review section, who was sitting in for Insurance Commissioner Edward J. Birrane Jr.

When Vinton scheduled another hering for March, Hoffman suggested it be postponed until "after the legislature," which ends its session in early April.

If no carrier provides insurance, the state could order the Joint Underwriters Association, composed of all insurance firms doing business in Maryland, to provide it on a pool basis at greatly increased rates. The insurance companies generally regard this step as a last resort and a no-profit situation for them.

Murray K. Josephson, assistant attorney general for the State Department of Licensing and Regulation, said the insurers' reluctance stems in Securities and Exchange Commission. The SEC, he said, has been holding attorneys liable for advising their clients to take certain actions in business.

Josephson said that Affiliated had actually "made money" from the Maryland Bar policy. "It didn't withdraw because of losses," he said. An Affiliated spokesman yesterday declined comment on the company's policies.

In a telegram to Insurance Commissioner Birrane, Affiliated's general counsel, David L. Johnson, today affirmed the company's new policy. Following a Monday meeting with Birrane, Johnson promised to renew for one year the insurance of 126 Maryland lawyer policyholders it had previously dropped. These are sole practioners or small partnetships paying premiums of under $1,000.

"Lawyers are like everybody else; they can be sued," said William M. Hesson Jr., a Towson lawyer and one of about two dozen persons who attended today's hearing.

"If there's no coverage," Hesson said, "it could affect the profession seriously, particularly the sole practitioner or the practitioner in small communities." These are the lawyers, Hesson said, who serve the need of "ordinary folk."

R. Patrick Maxwell, executive director of the D.C. Bar, described legal malpractice insurance as "a problem all over." Carriers are either dropping out of the market or greatly increasing their rates, he said.

Maxwell said malpractice insurance rates for lawyers rose "across the nation" at the beginning of this year. "If you are lucky, the increase was only 100 per cent." The average cost per lawyer, he said, ranges from about $250 in the District to $1,250 a year in California.

"It's the same problems doctors have been having," Maxwell said in a telephone interview. "There's more litigation, first of all, either because people are beginning to understand what lawyers do and how they make mistakes or because lawyers make more mistakes. There are also more lawyers willing to take the cases, and there are higher (jury) awards. It seems to be a self-feeing trend."

Spokesmen for the state's 130 podiatrists also complained today that they had been unable to obtain satisfactory malpractice insurance since their Lloyds of London insurers refused to renew policies that expired Jan. 31. The podiatrists, medical foot specialists, said they have only an offer from a relatively unknown firm with a Bahamas mailing address.

"I practiced this morning," said Murray J. Politz, Rockville-based president of the State Podiatrists Association. "Many older people were able to get out for the first time. But I have second thoughts about treating them without insurance."

After leaving the meeting, Politz had another problem. His car, illegally parked after 3 p.m., had been towed away.