Legal Developments and Risk Management Tips Impacting the Professional Liability Community.
We often write about the importance of engagement letters, in fact we have an entire sub-category devoted to engagement letter defenses. That’s because the engagement letter is the first line of defense. A letter that clarifies the accountant’s obligations, scope of duties, identity of the client, billing terms and other key clauses is generally a … Continued
A recent NY Appellate Division decision serves as another reminder of the importance of carefully defining the scope of engagement in an engagement letter. This is because, under New York law, an attorney may not be held liable for failing to act outside the scope of their retainer.
The White House Office of Management and Budget (“OMB”) is reviewing a final rule to reverse a 2016 regulation banning nursing home operators from entering into pre-dispute arbitration clauses with their residents as a condition of participating in Medicare and Medicaid. According to the OMB’s web site, the rule “removes provisions prohibiting binding pre-dispute arbitration and strengthens requirements regarding the transparency of arbitration agreements in LTC facilities.” Per the OMB, the rule facilitates “the resident’s right to make informed choices about important aspects of his or her healthcare” and eliminates unnecessary burdens on long-term care providers.
As a general matter, the Rules of Professional Conduct prohibit lawyers from sharing fees with non-attorneys. However, there are certain exceptions to that rule. Rule 5.4 states that “a lawyer or law firm may include non-lawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement.” A recent case out of Pennsylvania describes how a non-lawyer attempted to put this exception into action, albeit unsuccessfully.
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?
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?
Fee sharing is not unfamiliar to most attorneys. Model Rule of Professional Conduct 1.5(e) permits lawyers who are not in the same firm to share or divide a fee. A typical example is when an attorney refers a case out to “trial counsel”. But, fee sharing has its restrictions. For example, the Model Rules permit fee sharing only when the fee is reasonable, the client agrees to the arrangement and the division of the fee is proportionate to the share of each lawyer’s services or the lawyers assume joint responsibility for the representation. These requirements create ethical implications for lawyers engaged in fee sharing. Fortunately, the ABA recently provided some guidance.
Hired for A but sued for Z? It may be a more common problem than you think. In overturning a lower court’s decision granting summary judgment, the Appellate Division of the New Jersey Superior Court has added yet more fuel to the fire in the ever-evolving debate as to the scope of representation. In a recent decision, an appellate court held that an attorney tasked with a seemingly simple and defined engagement, may actually be on the hook for much more. This serves as an important reminder to effectively communicate with the client to ensure there is a consensus as to the scope and limits of the engagement.
A law firm in Connecticut recently recovered the largest med-mal verdict ever in the state only to be sued by their client for malpractice. How does that happen? We’ll tell you. Plaintiffs retained a well-known Connecticut law firm (“Firm”) to represent them in a med-mal claim alleging that Defendant Doctor (“Dr.”) made significant errors during childbirth which caused Plaintiffs’ son being born with cerebral palsy. In 2011, a jury returned a verdict for Plaintiffs, and awarded $58 million – the largest medical malpractice verdict in Connecticut state history. Following verdict, the parties settled for $25 million.
It’s easy enough to determine the statute of limitations for a malpractice claim. It’s not as easy to determine when the limitations clock begins to click. In New York, for example, the limitations period is three years but courts have grappled with questions regarding when a relationship between attorney and client ends. Courts have more recently employed what’s become known as the continuous representation doctrine in order to extend the accrual time. However, a recent decision in the Southern District of New York highlights an about-face of sorts.