The risk of a malpractice claim is real. That's the bad news. But, now that we have your attention, the good news is that insurance is available to defend and indemnify professionals who face malpractice claims. In order to receive coverage, however, professionals generally must disclose whether they are the subject of any potential claims when completing their applications. If an insurer discovers that a professional had knowledge of a potential claim, but failed to disclose it, it could rely upon the nondisclosure as a basis to disclaim coverage.
It’s generally known that communications between attorney and client are privileged absent waiver. Often, the client may waive the privilege by sharing an otherwise confidential communication with a third-party. But what if the third-party was engaged by counsel? Parties to a transaction rely on multiple outside professionals to advise on legal and business matters. In such cases, otherwise confidential communications are sometimes shared by counsel with third-party consultants hired to assist with the matter. However, the mere fact that a third-party consultant was engaged to assist with a matter at the same time as an attorney, does not necessarily mean that communications with the consultant are protected from discovery.
Professionals assume a duty of care to their clients. Accordingly, professionals may be held liable for damages to clients that are proximately caused by their negligent acts. In many cases, the link between the professional’s negligent act and the client’s injury is clear, such as a missed deadline that waives a client’s rights. The limits of foreseeability become more difficult to define when the professional’s alleged misconduct triggers independent acts by third parties, such as a government investigation of the client.
Friendship has taken on new meaning in the age of social media. Old acquaintances, former classmates, co-workers, professional contacts, public figures, family, and close companions may all be similarly situated as a “friend” on social media, regardless of the level of personal interaction with each. Social media users therefore often apply more liberal standard when accepting new network friends than they would in their personal lives. Professionals, however, may need to be more cautious.
Professional liability insurance is necessary to any responsibly-run professional practice. The limits of coverage available under an E&O policy help to protect professionals against financial loss. However, the limits of coverage between different policies do not necessarily offer the same protection, even if the face value would appear to be same. For instance, a policy may specify that costs of defense are included in the limits of coverage, a/k/a “burning limits,” which reduces the amount available to satisfy a judgment or pay a settlement as the case progresses. Generally, a policy will state limits of coverage available for each “claim” made against the insured, as well as aggregate limits that cap the amount of damages if multiple claims are brought. Separate claims are easy to distinguish when separate lawsuits are filed by different parties involving unrelated acts. However, do separate claims exist when a single lawsuit is filed that alleges several different instances of misconduct?
Attorneys are expected to act as zealous advocates for their clients. As such, attorneys often pursue claims on behalf of their clients even when the legal theory of recovery is unclear or the facts developed in discovery favor a defense verdict. In some cases, however, attorneys may pursue recovery even where they know that the claims are without merit or the theory of liability is contrary to an established rule of law. When an action is clearly frivolous, the defendants may be entitled to bring an action of their own against both the plaintiffs and counsel for wrongful use of judicial proceedings.
In the wake of recent well-publicized public relations nightmares, your friends at PL Matters considered the impact of PR firms on professionals. Public relations are a critical aspect of maintaining status in the public eye, communicating a message to consumers, and helping to promote a positive image. As a result, professionals often rely on outside PR professionals, both for their own business needs and the needs of their clients. But have you considered the implications of disclosing sensitive information to an outside PR firm?
All good things must come to an end. Professional firms are no exception. There are many reasons that a professional firm may close its doors; however, regardless of the cause, professionals must remain cognizant of their ethical duties to third-parties and clients throughout the dissolution process.
Businesses are increasingly becoming the targets of sophisticated cyber-attacks, and professionals are no exception. When cyber-criminals breach a professional service firm, they not only may gain access to the firm’s corporate data, but also confidential information from the firm’s clients. Therefore, it is incumbent on all professionals to make data security a priority.
Professionals owe a duty to their clients to satisfy the standard of care commonly exhibited by others within their profession. Consequently, privity is often required to maintain a malpractice claim; i.e. it is often the client with the exclusive right to sue her professional. This narrow application of standing assumes, however, that clients have retained their exclusive right to sue. In fact, as with many torts, clients may freely assign their right to file malpractice actions to third parties, even those that are adverse to the client in the underlying litigation.
Running a professional practice can be stressful. To be successful, professionals often must work long hours, under tight time constraints, and respond to the needs of demanding clients, while simultaneously working to manage their business and market themselves to new clients. For many professionals, the challenge of working in a professional practice is part of the reward. However, for others, the work can at times be overwhelming. Statistically, an alarming percentage of the legal profession is stressed and, unfortunately, many are depressed.
Many attorneys are licensed to practice in multiple states. By extending one’s practice across several jurisdictions, lawyers can expand the scope of services offered to their clients and increase their appeal. However, in order to provide this service, lawyers must comply with certain laws requiring that the attorney maintain a physical office within the state in order to practice there.
In the modern practice of law, attorneys are expected to be familiar with discovery of electronically stored information. Often this involves the production of files in their native format, which preserves metadata such as the document author, dates of creation and alterations, and where the document was stored. Production of electronic information thus facilitates document review, but also could lead to the disclosure of information that is beyond the scope of permissible discovery.
Clients entrust professionals with personal information. As such, professionals have an ethical duty not to disclose confidential information in a manner not permitted by the client. However, in today’s electronic age, professionals are also expected to take proactive steps to ensure that third-parties do not access confidential client information without authorization. Professionals who fail to prioritize client data security could expose themselves to civil liability.
Attorneys strive to be zealous advocates for their clients. Not surprisingly, when defending depositions, attorneys are often tempted to object to questions that they perceive to be damaging to their client’s case, even if the question itself is not improper. Attorneys should be cautious, however, to avoid making excessive objections that are not likely to be sustained.
The professional-client relationship often begins with a retainer agreement/engagement letter: a contract that defines the terms and scope of professional services. Accordingly, when a client files suit alleging professional malpractice, the claims will generally sound in both contract and tort. Whether a claim is asserted as a breach of contract or tort can have important implications with regard to the statute of limitations and other potential defenses. For instance, depending on the state, a tort claim may be time-barred where a breach of contract claim is not.
Competence is essential to a successful practice. Competence requires that professionals develop the skill set and knowledge base to meet their clients’ needs and keep up with changes in their practice area. In the modern age, remaining competent also entails that professionals understand and incorporate new technology into their practice. Utilizing new technologies helps to expand professional capabilities, promotes efficiency, and enables professionals to remain competitive. But keeping up to date with technology is not simply good advice for professionals who want to get ahead – it may also be an ethical obligation.
Clients expect professionals to work diligently on their behalf, but also want them to achieve results in a cost-effective manner. Experienced professionals are able to accomplish both ends by drawing from their knowledge base and past work product, rather than attempting to reinvent the wheel each time they undertake a new task. For instance, in the legal profession, it often behooves attorneys to begin legal research on novel issues within their firm to see if others have already addressed the issue and have analysis on hand. But attorneys may at times also find it useful to look to publicly-accessible briefs and filings from outside firms to see how others have addressed the topic. Relying on such third-party work-product, however, could be a recipe for professional liability.
Recent technological advances have rapidly changed the way professionals operate. Professionals are no longer tied to their offices, have myriad resources at their fingertips to research new issues and handle new tasks, and are able to reach new clients through social media. In general, these advances allow professionals to work more efficiently, increase their output, and broaden their professional footprint. However, professionals must tread cautiously when they employ technologies that do not merely assist with professional services, but actually supplant the professional’s role.
Professionals are often approached by friends and family for advice. At times, the particular issue might not fall squarely within the professional’s area of expertise or may involve a matter outside of the jurisdiction in which they are licensed to practice. Although the matter involves a seemingly trivial task, professionals cannot forego ethical standards simply because they happen to be close with the individual seeking assistance.
Depositions generally involve a series of questions and answers between the deponent and counsel. At times, however, counsel may want to use the deposition as an opportunity to have the witness demonstrate a task or record physical characteristics of a witness. Conveniently, nearly all attorneys now carry a camera in their pocket, in the form of their mobile device. When capturing images or video during depositions, counsel must be careful not to violate a right to privacy, or cast them in an offensive manner.
Professionals love to publicize success stories on the web. Writing posts on recent victories is a valuable way of marketing a practice and generating new business. In the case of professionals, however, success stories often entail details regarding clients, which could raise client confidentiality concerns.
Many professionals are transitioning from paper to electronic files. As a result, professionals tend to rely more heavily on electronic signatures. However, professionals must be cautious that e-signature technology does not violate any requirement to maintain traditional signatures with official filings.
Many professionals are proud of their work-product, their reputation, and their capabilities. Along those lines, many professionals are sensitive of their public image, including their online presence. Therefore, when others post critical reviews of a professional on social media, it may be tempting to respond in a defensive manner. But, be careful.
Nobody wants to be named as a defendant in a lawsuit. Litigation is expensive, time-consuming, upsetting, and often intimidating for clients. Being dragged into a suit is even more frustrating when the defendant knows the claims are entirely without merit. Defendants who are the victim of frivolous litigation are not without recourse, however. Where the underlying lawsuit is unwarranted, without evidentiary support, or presented for an improper purpose, such as harassment or delay, defendants may have the opportunity to seek damages against the plaintiff and the lawyers who brought the claim.
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?
Social media is ubiquitous in the workplace. Professionals use social media to write about their achievements, to discuss developments in their field, and to promote their practices. Professionals who use social media as an extension of their practice must be cautious, however, that the discussion of pending matters does not violate their duty of confidentiality to clients or expose confidential information that would prejudice others.
We work hard. We achieve results. We want to develop business as a result of those successes. That's all understandable since self-promotion is an important part of the development of professionals. By touting personal achievements, professionals are better able to position themselves to compete for new clients. Not surprisingly, many professionals include personal accolades in advertising materials. While the use of awards may be an effective advertising tool, if can also lead to ethical violations when done improperly.
It's just business, right? Not when it comes to the ethical and professional requirements associated with the transition to a new professional practice. Many professionals are seeking to expand their practice, or move, or add partners in an effort to acquire new talent. Some firms are streamlining and shrinking their practice. Under the right circumstances, departures may lead to mutually beneficial business opportunities for the departing professional and the former firm. In other cases, however, the actions taken by departing professionals could lead to costly litigation.
Many professionals are bound by a code of professional conduct. Sure, we have to play by the rules but those rules may require that we ensure others do as well. In a recent opinion, the Supreme Court of Ohio Board of Professional Conduct considered the circumstances in which an attorney is required to report rule violations by others. The Board addresses two specific questions in its opinion: (a) whether a lawyer prosecuting a malpractice case is obligated to report the defendant lawyer to the disciplinary authority and (b) whether the information acquired form the client regarding their prior lawyer’s conduct is privileged, thereby eliminating any duty to report.
Professionals depend on third-party email services to operate their business. As a result, professionals may assume that the vendor is safeguarding their electronic information and therefore the professional is not exposed. False. Consider an attorney sued recently for malpractice arising from an e-mail hacking scam.
Professional have become increasingly reliant on digital technology to run their practices. This digital revolution has reshaped the way that many professionals operate and has allowed professionals to better service their clients. At the same time, reliance on technology has created new areas of exposure for professionals.
Professionals love to advertise success stories. We want would-be clients to know the results we achieved for current clients. However, publicizing specific results could lead to the disclosure of confidential information. Professionals therefore must be cognizant of whether advertising a particular case or representation is likely to cause embarrassment or harm to the client, and ensure client confidentiality.
Had a great vacation? Post it on Facebook. Fun surfing? Post that too. Swam some laps while on FMLA leave due to a shoulder injury? You should probably keep that one to yourself. Employers continue to struggle with balancing their own marketing interests with the interests of employees in maintaining a social media presence. Of course, an employee’s use of social media may not always comport with an employer’s interests as identified in its social medial protocols or otherwise conflict with accepted practices. Take for example the recent decision from the Middle District of Florida.
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?
Professionals are passionate about their work. Consequently, professionals may become discouraged when they receive an unfavorable result. Professionals must be cautious in the manner in which they respond to bad outcomes, however. Taking to public forums to criticize a decision or ruling could result in a violation of rules of professional conduct and lead to personal liability.
You love blogging. Who doesn’t? For some professionals, blogging is an important part of education, outreach and networking. But, as we’ve discussed previously, blogs may be considered advertising and, if so, ethical considerations apply. The State Bar of California Standing Committee on Professional Responsibility recently circulated a proposed opinion for public comment that addresses the ethical implications of blogging by attorneys. The opinion considers when a communication subject to the Rules of Professional Conduct on attorney advertising.
Professionals must communicate clearly with clients regarding the existence and scope of the professional-client relationship. This is especially true for general counsel, who represent a company but also interact with its employees. We discussed these issues here in the context of the Penn State/Sandusky scandal two years ago but lingering issues remain which highlight the risks of dual representation.
Cyber liability threats continue to pose a danger for companies and professionals. In order to help mitigate the damages of cyber breaches, businesses are becoming increasingly reliant on third-party security vendors to provide cyber consulting and to manage their data security risks. While prioritizing data security is an important step for firms to take to minimize their own exposure, it is not always possible to eliminate threats entirely. And when breaches do occur, businesses and their customers may look to hold these third-party data security companies accountable for failing to prevent attacks.
Professionals owe their clients a duty to exercise the care, diligence, and skill expected of others in their profession in similar circumstances. Generally, the professional-client relationship defines the scope of this duty of care. However, in certain circumstances, the professional’s duty may extend to third parties, even complete strangers to the professional relationship. This is where things get tricky.
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.
Many professionals have access to online databases that store information not readily available to members of the public. These databases are a valuable tool for professionals who need additional information about a person for litigation purposes or for other lawful use within the course and scope of their professional practice. While these databases are only intended to be used for professional use, it is generally possible to access them for non-work-related purposes. This improper use of otherwise legitimate databases raises potential civil and criminal repercussions for the professionals.
Incorporating a professional practice can help to avoid individual liability when a professional is acting within the course and scope of his employment. For instance, certain states provide statutory immunity to design professionals such as architects and engineers who are acting in a corporate capacity. However, individual immunity from claims may be waived if the professional makes a representation, even inadvertently, in contracts or design plans that could be construed as accepting individual accountability for negligent acts.
Obtaining malpractice insurance is an essential component of risk management for professionals. But, the obligations continue beyond the purchase. Like any contract, both sides are bound to comply with the contractual terms: the insurer and the insured. Accordingly, professionals must take the time to familiarize themselves with the scope of policy coverage and specific policy exclusions. Failure to fulfill the requirements of a policy provision could mean the loss of coverage and individual exposure.
Marijuana laws in the US are rapidly changing. Colorado, Oregon, and Washington have legalized marijuana outright for recreational use. Twenty more states and the District of Columbia have legalized the use of marijuana for medicinal purposes. Now, the Pennsylvania legislature has proposed a new law that would permit limited medical marijuana use. Despite these changes at the state level, marijuana is still classified under federal law as a Schedule I drug that has no accepted medical use. Inconsistencies between state and federal laws create potential ethics dilemmas for professionals who seek to advise clients operating in the marijuana industry. In order to assist professionals navigate this murky legal landscape, the Pennsylvania Bar Association Legal Ethics and Professional Responsibility Committee recently issued a formal ethics opinion directed to counsel who provide legal services to marijuana-related businesses.
Communication is key. Defining clear objectives, limiting unreasonable expectations, and keeping the client reasonably informed of any developments in the matter at hand all go a long way to maintaining client satisfaction. However, not all professionals prioritize these relatively simple measures for successful representation. According to a recent study investigating malpractice claims against medical professionals, poor communication is a major contributor to liability actions. The study analyzed over 1800 lawsuits against doctors arising between 2007 and 2014, with a focus on the specific elements that led to patient injury.
Cyber liability claims are on the rise. Recent breaches against Home Depot, Target and Walmart have grabbed media attention. However, it is not only large retailers who are targets for attack. In fact, the majority of attacks are directed to small businesses. According to a recent study, the average total insurance claim for cyber breaches against small companies is over $600,000 and the average for larger companies is close to $5 million. Are you prepared?
Recent developments in cloud-based computing have enabled professionals to perform an increasing amount of work remotely. Because professionals are no longer tied to the office, they are able to work more efficiently and better serve their clients. However, the use of third-party technology companies to store confidential client data raises several ethics concerns regarding the professional-client relationship.
Many of us are perfectly comfortable publishing to an anonymous, online audience what we ate for dinner, our political views, relationship status, the argument we had with a cashier, or other personal details. This is not uncommon on various forms of social networking. But, when it comes to professional relationships, there are rules to follow. As a result, today's professionals must pause before airing dirty laundry concerning a client or former client. Doing so risks violating ethical duties to former clients of confidentiality and can impair reputations.
Starting up a successful professional practice requires ingenuity, business acumen, and a passion for the profession, but it also requires cash. In order to overcome financial barriers, some entrepreneurial professionals have looked to crowdfunding as an alternative method for raising capital. By utilizing social media and dedicated crowdfunding websites, professionals are now in a stronger position than ever to pitch their brand and solicit donations from large numbers of individuals in the general public. Crowdfunding offers the promise of a quick source of revenue, but may also implicate possible ethics concerns that could prove costly to professionals in the long term.