In a decisive win for the malpractice community, an independent auditor achieved dismissal in a securities fraud class action lawsuit by way of a 12(b)(6) motion. The Middle District of PA dismissed some of the claims against a troubled bank and all claims against the bank’s public offering underwriter and its outside auditor. The court accepted the auditor’s arguments that the plaintiff had failed to establish the requisite element of scienter necessary to maintain a securities fraud claim and, moreover, had failed to properly plead …Continue Reading
In a widely watched and long-awaited decision, the North Carolina Supreme Court definitively determined that an independent auditor has no fiduciary duty to the company, overturning a 2014 Court of Appeals decision finding that such a duty existed. The court, however, was evenly divided on the issue of whether the company’s claims were barred by the defenses of in pari delicto and contributory negligence, leaving undisturbed (albeit without precedential value) the Court of Appeals’ decision that the defenses did not bar the remaining claims. Certified …Continue Reading
Many professionals work on a contingency fee basis. If they achieve a favorable result for their client, they receive a percentage of the profit; no win, no fee. The basic arrangement assumes that the professional will continue to represent the client throughout the duration of the matter. But what are a professional’s rights when a client decides to hire new counsel in the middle of a case?
The Pennsylvania Supreme Court recently decided to hear a dispute over the enforceability of termination payments in attorney …Continue Reading
Unmanned aircraft, more commonly known as drones, are becoming increasingly popular in the civilian market. Advances in technology have made drones easier to fly and have expanded their utility for recreational users. Businesses likewise view drones as a new tool to increase their operations and bring new value to consumers. For instance, Amazon, recently unveiled its plans to use drones to make same-day deliveries to customers. But what liability issues await?
The rise in drone use has also prompted a demand for professional drone services. …Continue Reading
The accountant-client privilege doesn’t seem to get as much attention as the other more commonly used privilege defenses such as attorney-client or doctor-patient. However, a case out of the Illinois Supreme Court earlier this year is giving the other “a/c privilege” a lot of press. While not all states recognize this privilege, the ones that do generally find that the client is the holder of the privilege and requires the client’s consent to disclose any information exchanged between the accountant and client. Illinois, however, has …Continue Reading
In a case of first impression before the Delaware Chancery Court, the defense of in pari delicto was applied in favor of an auditor to defeat claims brought by the receiver of several insolvent insurance entities. This decision sets important and favorable precedent for the defense of accounting firms and other third parties when they become implicated in cases alleging corporate wrongdoing on the part of other defendants.
In the dispute, the Insurance Commissioner for the State of Delaware, in her capacity as receiver, alleged …Continue Reading
LinkedIn is perhaps the go to social media site for professionals seeking to promote their achievements and build their brand. LinkedIn has carved a niche within the social media landscape by integrating networking capabilities with the specific needs of professionals hoping to build relationships. Of course, the site also allows users to “endorse” a connection for certain practice areas or to write recommendations as to the user’s skill-set. It is this component of the site that has generated professional ethics issues and opinions. Moreover, the …Continue Reading
Although not nearly as satisfying, in many ways closing a file is just as important to a professional as opening one. How and when to close a file is a component of best practices. Most professionals follow some document retention protocol (and if you don’t, you should). But an interesting wrinkle arises when it’s not entirely clear when the engagement has come to an end. Some cases are withdrawn, some clients sign an engagement letter but do not pursue the claim, some clients decide to …Continue Reading
April 15 is looming. For tax professionals across the country, the emergence of spring also means it’s time to hunker down to prepare tax returns. In the midst of preparing returns and meeting deadlines, tax professionals must also consider the reality that tax advice and return preparation reportedly result in the greatest number of claims against accountants. Some good news is that there are common themes amongst the types of claims facing tax professionals which provide insight and valuable lessons. In particular, the IRS publishes …Continue Reading
Invariably, during the representation of a professional, defense counsel may be asked by his or her adversary: who hired you? For a variety of reasons, opposing counsel may be interested in whether you were retained directly by the professional or you were appointed as defense counsel by an insurance company. A perfectly reasonable and appropriate response to this question could be: it’s none of your business.
In most scenarios, the identify of who pays an attorney’s invoices is not considered privileged information. In other words, …Continue Reading