Author Archives: Paul S. Devine

Microcaptives Create Headaches for Professionals

Captive insurance companies have long been a popular vehicle for companies that require insurance in areas where it is hard to find coverage. Although the IRS has been somewhat suspicious of captives for some time, it was not until the past several years that microcaptives, or captives for smaller companies, apparently piqued the interest of the IRS. After the Tax Court issued an opinion over the summer, several other similar cases have gone to trial and await opinion. The result of these cases will have a significant effect on professional firms who facilitated the creation of these microcaptives, as the businesses hit with improper deductions and tax penalties will likely look for somewhere else to lay the blame.

Continue Reading....

Facebook’s D&O Lesson

Just like in life, directors must sometimes decide between taking what seems to be an unnecessarily formal route, or simply reaching the inevitable conclusion. Anyone who has spent an entire day putting together IKEA furniture only to finish with a few “leftover” screws can certainly understand that completion is often more important than the path it took to get there. However, the Delaware Chancery Court has made clear that when it comes to director liability, “no harm, no foul” is not the rule of law.

Continue Reading....

Malpractice in Disguise? Affidavit of Merit Requirement Tested

As you are undoubtedly aware, Professional Liability Matters previously circulated this handy table addressing the various affidavit of merit requirements throughout the country. Generally, in jurisdictions that require it, an affidavit of merit is necessary in order to maintain a malpractice claim against specified professionals, often including attorneys. But what is a “malpractice claim”? Suing a professional does not always equal malpractice. For example, a claim for malicious use of process is based upon a different standard than negligence. So this raises the question, is an affidavit of merit still required? In a case of first impression, a New Jersey Appeals Court recently ruled that it is not.

Continue Reading....

State Bar Prohibits Advertising via Text

Professionals are continuously looking for new ways to reach new clients. Given the popularity of text messaging, many firms have considered incorporating SMS messaging into their marketing plans. However, sending direct advertising to individuals’ cell phones could violate ethics rules on advertising and implicate federal laws prohibiting certain unsolicited telephone communications.

Continue Reading....

Anxiety Over the ADA

The Americans with Disabilities Act (ADA) is designed to protect people with disabilities from discrimination in the workplace. Under the ADA, an employer must provide a reasonable accommodation to an employee with a disability if the employee requests an accommodation. Employers should take note of a recent decision that includes a new class within the definition of disability. In Jacobs v. N.C. Administrative Office of the Courts, the court reversed the district court and found that social anxiety disorder is a protected disability under the ADA.

Continue Reading....

When and How to Report Ethics Violations

The legal profession is somewhat unique in that it permits self-policing. An attorney has an obligation to report misconduct; however, a threat to report misconduct may itself run afoul of the ethical rules. At issue are at least two competing rules of professional conduct. We all want to make sure attorneys, as a group, are fighting cleanly, but these competing rules present a dilemma. How to know when, if, and how to report?

Continue Reading....

Faulty Engagement Letters Is #1 Cause of Claims

Seriously; you still don’t require that your clients execute an engagement letter? Apparently not. Professional Liability Matters routinely warns of the risks of representing a client without a clear engagement letter. In addition to laying out the objectives of the representation, well-crafted engagement letters help to reduce the likelihood of claims from dissatisfied clients. It would seem obvious, then, that attorneys would require clients to sign an engagement letter as a prerequisite to any attorney-client relationship. However, in a recent national legal malpractice conference held by the ABA, industry experts cite faulty or missing engagement letters as the most prolific cause of legal malpractice claims.

Continue Reading....

Third-Party Harassment Could Lead To Employer Liability

Most employers understand the significant consequences of sexual harassment at the workplace and take proactive measures to train employees about proper conduct. However, liability is not limited to the conduct of employees. Employers also have a responsibility to prevent sexual harassment by third parties such as clients, vendors, patients, and customers, when the employer knows about the conduct and fails to take any corrective action. Although third-party harassment is reportedly just as common, many employers do not take appropriate steps to prevent it.

Continue Reading....

Hell’s Kitchen: Star Chef Sued for Wage & Hour Violations

On Thursday, June 13, 2013, a proposed class action was filed on behalf of all former and current employees of Chef Gordon Ramsey’s Los Angeles restaurant “The Fat Cow.” The class action is led by a former server, barista, and two hostesses who are taking their beef to California state court against the celebrity chef’s restaurant. The class action alleges that the restaurant’s management took tips from former employees, and violated a series of other wage-and-hour labor codes. The Fat Cow opened its doors on October 1st, 2012, and is already catching steam over improper managerial practices.

Continue Reading....

A Lesson in Ethical Attorney Billing

A lawyer stands at the gates of heaven and pleads his case to St. Peter. “I’m much too young to die. I’m only 48.” St. Peter responds, raising an eyebrow: “Forty-eight? Not according to your time sheets." Unfortunately, some attorneys give the rest of the profession a bad name for abusing the billable hour system. Perhaps a lesson in ethical billing is in order.

Continue Reading....