In the professional liability world, errors occur. To quote Forrest Gump, “*% happens!” These errors can carry great consequences, and can include payouts by insurers under E&O policies. However, what happens when there is a possibility to rectify the error and place the would-be plaintiff in a position where they were before? Also, how conceivable is it to utilize funds from other sources as a means to bring closure to claims.
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.
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.
Professionals are often entrusted with access to personal and financial information from their clients. Professionals take great care to ensure that they protect this information from disclosure and that they comply with ethical guidelines regarding proper use of client funds. However, even when professionals fully comply with the rules, there may be occasions where employees or other individuals who have access to the information through their professional employer use it for an improper purpose. While professionals cannot always prevent employee misconduct, the actions they take to remedy any misdeed can often mean the difference in assessing personal liability.
Professional consultation doesn't always go as intended. Despite good intentions, there are always risks facing professionals that the representation will turn sour and lead to a malpractice claim. Clients also face risks and some sophisticated clients take steps to reduce exposure. For example, more corporate clients are attempting to reduce exposure by requiring counsel to sign indemnification clauses within the engagement agreement. Many firms agree to represent clients pursuant to such clauses in order to develop or maintain business relationships, notwithstanding the additional risk. However, experts warn that doing so may make firms personally responsible for unforeseen liability, and that long term risk may not justify the short term gain.
Attorneys may be prepared for, or at the very least are aware of the risk of, claims raised by current or former clients. Generally, the first element in any malpractice claim is the existence of an attorney-client relationship. The Restatement (Third) of the Law Governing Lawyers provides that an attorney-client relationship arises when, “a person manifests to a lawyer the person's intent that the lawyer provide legal services for the person; and either (a) the lawyer manifests to the person consent to do so; or (b) the lawyer fails to manifest lack of consent to do so, and the lawyer knows or reasonably should know that the person reasonably relies on the lawyer to provide the services.” That seems straightforward enough, right? Nope! While in many malpractice cases it is clear whether the parties established an attorney-client relationship, it is not often so clear. Consider the following example.
It wasn’t long ago when filing deadlines forced attorneys to rely on the speed and reliability of their process-server or messenger. How many filings were missed due to a flat tire or traffic? If the filing wasn’t stamped before the court closed at 4 PM, the filing could be considered late and the attorney left answering to the client. The dawn of electronic filing has changed this process. Many courts accept filing up to midnight of the due date and hand-delivery is no longer a requirement. But how many of you have considered some of the risks of e-filing? How about the importance of monitoring your filings and safeguarding your e-filing password? Consider the lesson taught to an attorney subject to discipline in New York for allowing non-attorneys to use his e-filing information without proper oversight.
The attorney-client privilege does not provide an excuse to withhold all damaging documents. Documents in an attorney’s possession are not necessarily privileged and the refusal to produce discoverable materials may be grounds for sanctions. A Massachusetts court is currently considering whether a prominent, global law firm should be sanctioned for the allegedly imprudent conduct of a former partner. An appellate panel ruled that the trial court erred in deciding that the partner acted in good faith when he invoked the work-product doctrine to conceal key information in a suit against a former client. The appellate court has yet to determine whether sanctions are appropriate.
A recent trend is developing of late where employers are considering “no smoker” employment policies. These policies go beyond “no smoking in the workplace;” some ban employees from smoking at any time. Such policies may lower insurance premiums. Some employers also suggest that these policies cut down on productivity issues due to smoke breaks and high absenteeism due to smoking-related illnesses. Opponents of these policies argue that they are discriminatory or in violation of privacy laws. This raises an interesting debate.