Legal Developments and Risk Management Tips Impacting the Professional Liability Community.
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 …
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.
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.
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 New Jersey Supreme Court recently declined to dismiss a medical malpractice case for an attorney’s failure to file a timely affidavit of merit (AOM). The court based its decision in large part on the trial court’s failure to schedule a preliminary conference (called a “Ferreira” conference in NJ) to discuss the sufficiency of the AOM. The court further stated that it would order improvements to the courts’ automated case management system to ensure the electronic notification of both the AOM filing obligation and the scheduling of such Ferreira conferences.
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.
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.”
In a decision addressing the facts necessary to plead a breach of fiduciary duty claim against a broker, a California federal district court considered the difference between an “ordinary” broker-customer relationship, and one which rises to the level of a fiduciary relationship.
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.
Today’s employees demand flexibility. In turn, many employers are moving towards a “results orientation” business model and getting away from the standard 9-5 schedule. In other words, the employer cares less about when employees get the work done, and only cares that the work gets done effectively. Employment laws are only beginning to catch up to this shift in work hours. Take for example the recent decision where the Third Circuit confirmed that the FLSA requires employers to compensate employees for breaks of 20 minutes or less where the employer allowed employees the flexibility to log off their computers at any time they wished.