Andrew P. Carroll

All articles by Andrew P. Carroll

 

Lawyers on a Short Leash: Bar Admission Restrictions

Unlike most licensed professions, the practice of law can significantly restrict an attorney's geographic mobility. If an attorney wishes to move to another state, it typically requires at least one year of planning before the move is possible. This may include studying for and successfully taking the new state's bar examination, re-taking the Multistate Professional Responsibility Exam, and going through another character and fitness review. However, the Uniform Bar Examination is now used in the majority of states and there appears to be significant momentum toward a more relaxed approach to attorney licensing. While a recent decision by the Ohio Board of Commissioners on Character and Fitness may appear to be a halt on this new trend, it will likely also serve as one of UBE proponents' key examples of an arguably archaic system that must be changed.  

Technological Advancements Complicate Confidentiality

The increase in connectivity has greatly improved an attorney's ability to represent her clients. From searching a party on social media, to quickly parsing through online materials, saves hours and hours of time. Furthermore, attorneys can leverage professional organization memberships to seek input from thousands of other practitioners on legal questions or strategic decisions. Thus, an attorney can investigate deeper than ever before and easily liaise with other practitioners. But, this cuts both ways. Attorneys must be aware that technological advances also mean that her own clients and experts are vulnerable, and they must take steps to protect confidential information as necessary.  

The Dreaded Settle and Sue: Alive and Well in New Jersey

It is no secret that parties more often settle than proceed through trial. While courts roundly applaud this as beneficial to both the system and litigants, it sometimes generates second guessing from the clients. As Larry David put it, "a good compromise is when both parties are dissatisfied." It is therefore no surprise that many legal malpractice claims follow from settlements, despite the general principle that the settlement itself precludes such a suit. In a recent decision from the New Jersey Appellate Division, the court's discussion of when this principle applies does little to pacify concerns of attorneys that their clients will settle and sue. Even well documented settlement agreements, and testimony reflecting a voluntary resolution, still can be undone via a malpractice complaint.   

Attorneys Can’t Bury the Smoking Gun

The smoking gun. That key piece of evidence that will conclusively prove your client's case and guarantee victory may be out there. Truly dispositive evidence is rare, given that most cases turn on a series of events, an application of the law or several facts, as opposed to one document or one line of testimony. But what if you discover that key fact which is harmful to your own claim? It may be tempting to quickly settle the case without disclosing the smoking gun. Not so fast. A recent decision from the Western District of Pennsylvania has taken issue with that response from counsel for the plaintiff, and awarded sanctions for the failure to quickly dismiss the complaint.  

Lawyers Must Admit Mistakes

No one is perfect. In the adversarial arena of litigation, attorneys are rarely willing to admit even having a weak legal argument, let alone an actual error. However, the American Bar Association recently issued an opinion which makes it an ethical duty for attorneys to disclose any material errors in representation to their clients.  

Malpractice from Litigation Funding?

Third-party litigation funding is still in its relative infancy and yet it has blossomed into a massive industry. Litigation funding spans from payday-like loans for personal injury litigation to multi-million dollar intellectual property disputes. Many attorneys across the spectrum have commented on the issues that could arise from this new market, but malpractice lawsuits in connection with the funding itself are extremely rare. However, a recent suit filed in the United Kingdom could be a sign of things to come for those firms who are involved in the financing transaction itself.  

New Law in PA: Quantum Meruit for Predecessor Counsel

In a recent decision, the Pennsylvania Supreme Court brought the commonwealth into line with the majority of states in allowing predecessor law firms to bring quantum meruit claims against substituted counsel. In the underlying case, the plaintiff’s claim was originally brought by an attorney at Firm A who then left for Firm B. While the plaintiff initially allowed Firm A to remain as co-counsel, the firm was eventually dismissed and the case settled. Firm A then sued Firm B to recoup a portion of the attorneys’ fees for work performed until dismissal.  

Court Castigates the Solicit-Then-Refer Model

Attorneys referring cases amongst each other is as old as the practice itself, with referral fees embedded in state and model ethical rules. Whether a conflict exists or the attorney who receives the case is not adept at handling that type of matter, a referral can be a way for attorneys to be rewarded for successful marketing while ensuring proper client representation. However, when a firm appears to focus solely on marketing, and not on the legal matters advertised, significant ethical concerns arise.  

Alleged Crimes Are Not Covered, Right?

For most professionals, renewing your policy is a matter of fact that includes little thought beyond answering a questionnaire. However, it is incumbent upon both insurers and policyholders to regularly review policy language to determine what is, is not, or only may be covered. For example, there is often an assumption that most policies will not cover certain criminal or intentional acts, but that is not always the case. For example, in a recent New Jersey District Court decision, the court found that an insurer…  

Standing Battles Rage on in Data Breach Litigation

One of the primary points of contention in data breach actions is when, and whether, sufficient damages exist to meet the standing requirements under Article III. Circuit courts across the country have come to different conclusions, with some requiring a showing of actual damage and others allowing the existence of the breach to essentially serve as confirmation that the data will be used illicitly. According to a recent brief in support of certiorari, the DC Circuit falls into the latter category and a review by the Supreme Court is necessary to resolve the current circuit split.  

Accountants Still Targeted a Decade after Recession

Similar to the fallout from Enron, the Great Recession of 2007 saw many accounting firms back in the cross-hairs for allegedly failing to warn of the impending financial doom. Many of these entities (turned plaintiffs) were massive companies with billions in assets, leading to protracted and expensive litigation. While some cases settled to avoid further legal costs, one major accounting firm was recently found liable for violating audit standards for one of its major bank clients prior to the Great Recession. The presiding judge is now set to proceed to the damages phase of the trial, where it will be determined the extent to which damages were caused by the violations.  

How Long Is Too Long to Wait for Malpractice Actions?

One of the most common problems facing a would-be plaintiff considering a malpractice case is when to file suit. Similarly, those that defend professionals must consider whether to move to stay proceedings if applicable. Especially with accountants and attorneys, causation and damages are difficult to calculate until the underlying matter has concluded. This means that the notoriously long legal process can often come into conflict with the statute of limitations, or create evidentiary problems. The decision is whether to wait many years for the underlying action to conclude and damages to materialize, or continue with the malpractice action in the midst of unresolved issues although the facts are still fresh in witness’s minds. In a recent Texas appellate decision, the court ruled that the case should proceed immediately.  

The Price of High Profile Investigations

With the recent wave of allegations concerning employment-related conduct, there may be in uptick of employers engaging outside firms to conduct internal investigations. While these can be kept in-house, high profile cases and social media often results in the publication of these reports to the public. Consider the NFL’s investigation of the Miami Dolphins known as “bullygate.”  

Congress Considering Federal Cyber Breach Laws

Huge cybersecurity breaches at major retailers caught the attention of the public and have made headlines. Now, more recent breach at one of the major credit reporting agencies has the attention of Congress. 48 states and the District of Columbia already have some form of legislation governing security breaches. These statutes typically begin by laying out who is subject to the requirements, such as businesses and information brokers, and what information is considered protected “personal information.” The laws then outline what constitutes a breach, the requirements for providing notice, and exemptions to the law. What's next, Congress?  

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.  

Recusal: Use it or Lose it

Attorneys and their clients must make strategic decisions during litigation whether to take certain actions that are available to them. Should you move for dismissal or answer the complaint? Should you seek more specific answers to written discovery, or just save your questions for a deposition? These are common questions that do not necessarily have a “right” answer. However, the Pennsylvania Supreme Court recently ruled that waiting too long to decide on a motion to recuse may result in the request being untimely.  

Guilt by Association

Making a referral is most often understood as a recommendation as to the quality of that professional’s services or products. In turn, there are different tort theories that are recognized in many states for negligence in doing so, and potential liability for the actions of a referred professional. What is far less common is to allow liability to flow through several parties even absent independent conduct or a theory of agency.  

It’s the Little Things That Count in Cybersecurity

Today it seems as though cyber-security protections are always a half-step behind hackers. For every patch that quietly protects from one type of ransomware, there’s another WannaCry infecting a major company or financial institution. Of course, cyber-security is an important concern for all businesses, including professionals, a point which is still gaining awareness across the country. As these less technologically sophisticated businesses learn more about the importance of cyber-security in the modern world, it can be easy to forget that there are many everyday protections that are just as valuable as the software that protects your data.  

NY Continues Trend of Rebuffing Online Legal Service Providers

New York has joined a growing list of states with ethics boards limiting an attorney's ability to participate in online legal service providers like Avvo and LegalZoom. Similar to other jurisdictions, the New York ethics board authored an opinion honing in on the so called “marketing fee” charged by Avvo for attorney use of its website. Although the opinion declines to decide a list of other potential ethical issues with the company, it concludes that the “marketing fee” is actually a referral fee in violation of Rule 7.2(a) of the New York Rules of Professional Conduct.  

Lawyers: Don’t Battle for the Throne

Many business deals begin with a handshake or a quiet conversation. Corporate America is filled with side deals and compromise and promises. Often, these arrangements are perfectly acceptable. But, the intersection between business and politics is a different animal; there are strict regulations regarding governmental contracts and bids and proposals. Transparency is key. Attorneys engaged by governmental contractors must be careful. The recent indictment of a Pennsylvania mayor and an outside attorney in what is being alleged as a pay-to-play scheme is a reminder of the fine line attorneys must walk. In addition to the target-attorney being named, the indictment is littered with references to other attorneys allegedly involved in the scheme. This involvement spans from contributions to the mayor’s various campaigns to presence at meetings to discuss city contracts. While many clients may battle for the throne, attorneys must steer clear of even the appearance of impropriety.  

Be an Expert with CPA Experts through the AICPA Code

Most jurisdictions require that a plaintiff establish allegations of accounting malpractice through expert testimony. Moreover, accounting experts are often relied upon to establish damages. Accordingly, the vast majority of litigators, even those outside of the malpractice community, will encounter a CPA expert witness. This may be daunting for attorneys. Fortunately, there’s a handy, but underutilized, guide. The special reports to the AICPA Code of Professional Conduct include ethical standards required of every CPA. The reports provide a readymade guide for evaluating the efficacy and admissibility of a CPA expert’s testimony. Using these standards as a benchmark should help practitioners retain and oppose an accounting expert.  

High Court Hands Victory to Secondary Debt Market

In Justice Neil Gorsuch’s first written opinion for the Supreme Court, he handed down a major victory for the secondary debt market by ruling that debt buyers do not fall under the definition of “debt collector” for purposes of the FDCPA. Under the FDCPA, debt collectors are subject to strict requirements when attempting to collect debts and violating these rules leads to significant liability. Until now, a split among the circuits existed as to whether the term “debt collector” includes entities that purchase debt originally owned by another party.  The Supreme Court therefore granted writ in Henson v. Santander Consumer USA, Inc. in order to resolve the inconsistent application across jurisdictions.  

Debt Collectors Earn Win on FDCPA Claim for Stale Debt

Debt collectors recently won an important victory in the U.S. Supreme Court, which ruled that filing a stale claim in bankruptcy court does not run afoul of the Fair Debt Collection Practices Act (the “FDCPA”). Although the Opinion does not affect a debtor’s potential claim for sanctions under frivolous filing rules, it does remove at least one potential avenue for recovery.  

Don’t Be a Halfway Law Partner

It is not uncommon for attorneys to join forces to defray costs. This often means sharing office space, support staff, and equipment. Some attorneys take this a step further, advertising themselves as a partnership even if their practices remain separate. Such arrangements should be made with caution, however, as they may lead to vicarious liability among the so-called partners.  

What’s a “Communication” under the FDCPA?

The five-day rule under the FDCPA, which requires a debt collector to provide the precise amount owed within five days of its initial communication with a borrower, often operates as a trap to debt collection firms. The lack of a statutory definition for “initial communication” means that courts are free to interpret what will qualify, leaving debt collection firms to make their own determinations as to what will sufficiently protect them from later lawsuits based on this section of the statute. Although pleadings are still a widely acknowledged exception, many states do not include pre-foreclosure notices.  

Attorneys: Be a Watchdog for Your Accountant Clients

The standard of care governing every professional begins with the scope of the engagement. That may seem fairly obvious to those in the professional malpractice community but it is often misunderstood by laypeople. Isn't a CPA engaged to detect fraud? Isn't a lawyer engaged to win my case? One of the difficult aspects of defending a malpractice case is overcoming the lay perspective of the precise role of a professional. Often the defense of a professional can turn on whether the fact finder fully understands the distinct role of the professional in the limited context of the facts presented. Accordingly, professionals should be proactive in ensuring that the parties and others refer to the applicable professional standard that governs the case.  

Lawyers ≠ Partnering with Non-Lawyers

Law firm financing has become an increasingly complex and interesting aspect of the legal business. From personal injury litigation loans, to the financing of the Gawker lawsuit by a Silicon Valley billionaire, it appears many want to get a piece of a lawsuit these days. However, the Second Circuit recently affirmed a district court ruling that law firms are still forbidden fruit for third-party financiers.  

Bankruptcy Law Preempts State Claim for Wrongful Use of Civil Proceedings

The Automatic Stay under U.S. Bankruptcy law is a powerful tool in the judicial system. By filing for bankruptcy, a person or entity immediately creates a cocoon of safety that is generally impenetrable without subjecting the offending party to punitive repercussions. In fact, even parties without knowledge of the bankruptcy filing may nevertheless face consequences from the presiding bankruptcy court for violating the Automatic Stay. Of course, this does not mean that parties can use a bankruptcy petition solely to protect themselves from outside pressures. The bankruptcy rules also allow a court to impose sanctions upon a party or its attorney if it the petition is found to have been filed frivolously. However, a Pennsylvania trial court recently reaffirmed that it remains within the bankruptcy court’s sole discretion to do so, and that any similar state court claim is preempted by federal law.  

CPA Takes Advantage of Procedural Quirk

The idiosyncratic nature of the Louisiana legal system is one that is noted, if not explored, in many law schools around the country. Even as early as high school, many teachers will explain that Louisiana is unique insofar as its legal system is based primarily on Spanish and French civil law, rather than the British tradition used in the other 49 states. The differences between Louisiana and the rest of the country do not end there, however, and a large accounting firm was recently successful in obtaining dismissal of an action based on a Louisiana-specific accounting malpractice statute.  

Attorney + CEO = Coverage Denied

Attorney? Check. CEO? Check. Coverage? Unlikely. Some attorneys wear multiple hats. We have other interests, other business ventures, other opportunities to make a buck. Attorneys are often exposed to other areas of business depending on the nature of their practice. Through their role as counsel, or through other opportunities, some attorneys become more directly involved in non-legal businesses. The more traditional route is to switch to in-house counsel, but sometimes attorneys will go so far as to start a new company. While both are commonplace and not inherently problematic, issues begin to arise when an attorney is both practicing law and working for a company. The blurring of the line between lawyer and business executive not only creates potential conflicts of interest, but may have coverage consequences.  

Title Insurer off the Hook for Closing Agent Misconduct

The closing of a home loan often involves multiple parties, and even a sophisticated buyer can be confused as to who represents whom. The individuals present can include representatives from the bank, real estate agents, title insurance agents, etc. However, each person in the room has a specifically defined role, and it is important for all parties to be aware of what these roles are.  

Appraiser Targeted for Foreclosed Home

It has been almost a decade since the subprime mortgage crisis rocked financial markets across the world. In response, we saw the introduction of the Dodd-Frank legislation, civil suits against many of the country’s largest banks, and the emergence of a new market for purchasing defaulted loans. Since this initial flurry of activity, the economy has slowly recovered and the topic largely disappeared from the public eye. However, the legal wake continues to reverberate in the foreclosure litigation arena, with mortgage holders continuing to search for additional sources of recovery on loans secured by underwater homes.  

Does Client Know You’re Uninsured?

Between required law school classes and the Multistate Professional Responsibility Examination, attorneys are given considerable training on the rules of professional conduct before starting a career. Attorneys get further refreshers on the rules when reviewing potential clients and the occasional issues that arise during representation. But how many attorneys review the rules of professional conduct that apply to the specific jurisdictions in which they practice? Considering the heavy overlap between the different states and model rules of professional conduct, doing so may seem like a waste of time. It isn't. Attorneys who fail to review their particular states’ rules do so at their own risk as distinctive rules do exist in many states.  

When Does the Clock Start?

The application of the statute of limitations affirmative defense is theoretically simple, yet practically complex. Often, the issue is when does the clock start; i.e. when does the claim accrue. The result varies by state and may come down to the specific fact pattern. The water may be muddied further if the plaintiff incurs more than one injury. This is relevant to the professional malpractice community. Take for example a recent California accountant malpractice case involving state and federal audits and $10 million on the line.  

Is the Unfinished Business Doctrine Finished?

Many professionals do not end their careers where they started. Professionals are on the move. The vast majority of professionals are impacted by the transition of a colleague from one firm to another. In fact, with the increase in online media covering the legal industry in particular, news of partner transitions is readily available. In a recent California case, a trustee of a bankrupt law firm has taken the position that the dissolved firm should retain all ongoing legal fees from cases started at the firm. This could have significant impact on how professionals transition their practice.  

“Trust me, I’m a lawyer”

Attorneys are people too. In the midst of negotiating/litigating on behalf of clients, attorneys also manage their own day-to-day lives. Attorneys sign leases, enter into contracts, negotiate with vendors and otherwise engage in discussions that are personal in nature. It may be tempting for attorneys to seek leverage by boasting their title as "esquire" or to disclose the attorney's affiliation with a particular law firm. But, to do so may trigger legal and ethical implications.  

Does the A-C Privilege Survive a Company’s Death?

When it comes to interesting ethical quandaries, the case of U.S. v. Martin Shkreli is the gift that keeps on giving. As we discussed in a previous post, Martin Shkreli has asserted the “advice-of-counsel” defense in the securities fraud case he is facing in the Eastern District of New York. Since our last post, Shkreli has served a document subpoena on one of the law firms that represented several of his companies, as well as him personally. What complicates this matter, however, is the fact that many of these companies are now defunct and therefore lack any active individuals who can waive the attorney-client privilege on their behalf.  

Don’t Forget to Read Your Pleadings

World Wrestling Entertainment is punching back in a class action lawsuit filed by several of its former wrestlers. However, the WWE’s recent court filings take aim at the plaintiffs’ attorneys as much as the plaintiffs’ legal claims. The case provides us with a timely example of the ramifications of failing to carefully read pleadings before filing.  

What’s Reasonable Attorney Review?

Although some law firms are slow to embrace new technologies, debt collection firms appear to be the exception to this general rule. Most of these firms use sophisticated computer software to retrieve information from their creditor-clients, and use the program to automatically populates legal forms. This process saves a significant amount of time for attorneys in a high-volume field, allowing them to file hundreds of basic pleadings in a single day. However, this process has come under increasing scrutiny from both debtors’ rights firms and the government.  

Malpractice for a Client’s Failure to Report

Although some law schools are notorious for offering elective courses like “space law” that are of limited practical use to most attorneys, there is still a set of core classes that are invariably recommended. Courses such as tax law and corporate law often fall into this group, as most lawyers will have to consider tax repercussions or the structure of a company at some point in their careers, regardless of their practice area. One big firm is now learning that despite the dearth of classes in insurance law, it is a subject that every attorney should become familiar with.  

SEC Big 4 Settlement: CPA is Too Close to the Client

Eager young accountants - all professionals, really - often set high goals, but the most common endgame for most is to become a “rainmaker.” Those who build significant relationships and turn leads to a regular stream of business are often in a position to excel professionally. While perceived expertise in a particular field is a must, it is often the relationships that set these partners apart. But when does a relationship become so familiar that a CPA may lose his independence? The SEC recently weighed in on that topic in announcing its recent settlement with Ernst & Young.  

Attorneys Facing Addiction

It is an unfortunate reality that the legal profession reportedly has one of the highest levels of addiction of any occupation in the country. Although many states maintain hotlines and other services available to attorneys, it is all too common that addiction struggles advance to the point where ethical violations result for the attorney.  

Case Evaluation: Attorney & Accountant Conflicts

Professionals strive to develop a reputation within a particular field. The real success stories involve those who are known as the go-to professional for one or more situations. A problem with such success is that it may increase the risk of potential conflicts. If all clients seek the same professional for Issue X, there are bound to be conflicts down the road. In a recent case in the Southern District of Florida, one company alleged that its accountants and lawyers violated their professional duties when they provided proprietary information to a competitor.  

Baseball’s Cyber Lesson: The Cyber Field of Dreams

Remember when you chose your first online login credentials? Perhaps it was for your brand new Hotmail account, or that lightning fast AOL dial-up internet. Like many people, it was probably the first time you ever had to choose a password and it was also probably some combination of your kids’ names, your spouse’s name or your mailing address. Like far too many people, your password in 2016 may not be much different from the one you made in 1996. Despite the best efforts of IT, most people are loath to complicate their lives with long and varying passwords. However, corporate espionage is a real threat in today’s computerized society and executives must realize that treating the privacy of your company account is a recipe for liability. While it may not be your job to keep the entire system safe, it is your job to keep your key to it safe.  

Til Death Do Us Part: Prenuptial Agreements for the Professional

Engagement letters are a must. In case that wasn’t clear enough: all professionals should document the scope of the client relationship for each and every engagement. New clients and long-standing clients alike, engagement letters are a must. It’s a key aspect of best practices that is often overlooked. "My client and I have developed a trusting, professional relationship over the years and therefore it is entirely unnecessary to propose an engagement letter." It may feel a bit like a prenuptial agreement. Why plan for the worst when things are going so well?  

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.  

When Clients Turn on their Lawyers

Have you heard of the “Pharma Bro”; the CEO who, according to reports, notoriously purchased a drug used to treat AIDS patients only to dramatically increase its price? He’s made considerable press recently and now he’s turning on his lawyers. In a recent hearing, lawyers for pharmaceutical hedge fund manager Martin Shkreli requested a delay in scheduling trial as they contemplate asserting “reliance of counsel” as a defense.