Professional Liability Matters

LATEST INSIGHTS

March 30, 2016 • Accountants, Professional Liability Matters

Auditor Securities Fraud: Negligence isn’t Enough

Unlike most malpractice scenarios, alleged negligence is not enough to sustain a claim in the context of securities fraud against an independent auditor. Rather, in most jurisdictions the plaintiff must establish that the audit was of such little value that it was a “pretend” audit which provided no benefit. Alleging that the auditor could have done more is insufficient absent properly pled allegations that the auditor maintained an evil intent or acted with reckless conduct. This standard is fairly well-developed. Yet, the exposure is often considerable and “victims” of alleged fraud committed by public companies continue to target the independent auditors engaged to audit those companies. A recent decision out of the SDNY highlights another victory for the defense community in securities fraud cases targeting an auditor.

March 29, 2016 • Professional Liability Matters, Sanctions

Attorney Jointly Liable with Client for Misconduct

Professionals must play the hand they’re dealt. Good, bad or ugly, a professional assesses the situation and provides a recommendation as to how to overcome certain obstacles and achieve the client’s objectives. However, professionals do not have unfettered authority. Rather, all classes of professionals are bound by certain guidelines which delineate how a professional must behave on behalf of the client. Professionals that stay the course will not be held accountable for the client’s indiscretions, mistakes or even intentional wrongdoing. But, in the rare scenario when a professional is complicit with the client, both may be held liable.

March 23, 2016 • Engagement Letters, Legal Malpractice, Professional Liability Matters, Risk Management

Representation Could Go Farther Than You Think

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.

March 22, 2016 • Experts, Professional Liability Matters

Affidavit of Merit Failures: Chose Your Expert Wisely

In many states a litigant cannot proceed with a professional liability lawsuit without an appropriate affidavit of merit. As our handy table shows, each state has its own rules as to AOM requirements and other details regarding substance and form. Simply filing an AOM though is not always enough. Ensuring that the AOM has been prepared by the appropriate professional and addresses the issues of the particular case is critical to surviving a potential motion to dismiss. Take for example two recent cases out of New Jersey.

March 16, 2016 • Legal Malpractice, Professional Liability Matters, Sanctions, Settlement

Spoliation Examined in LPL Context

It is a risk management necessity that professionals document their files appropriately and confirm conversations in writing. A recent NY decision goes further, and suggests that it may be wise to save original documents to reduce the likelihood of a spoliation argument. In that decision, the Appellate Division, Second Department of New York considered whether a former client was entitled to evaluate an original document to determine whether her fingerprints were on a settlement offer.

March 15, 2016 • Accountants, Coverage, Professional Liability Matters

No Concurrent Causation = No Coverage

The doctrine of concurrent causation can apply in many different insurance coverage scenarios. The doctrine provides that if two causes – one covered by an insurance policy and the other excluded by the policy – both contribute to a loss, then coverage should be afforded under the policy. The doctrine would seem to expand coverage in scenarios where a potential exclusion might otherwise preclude it. Seems simple, right? Not always. Take for example the following APL case where the court found the concurrent causation doctrine did not apply and coverage was denied.

March 9, 2016 • Miscellaneous Professionals, Professional Liability Matters

Professional Liability for Drone Operators

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?

March 8, 2016 • Design Professionals (A&E), Professional Liability Matters

Is it Tort or Contract? Both

Contract law is that body of rules that govern agreements between contracting parties. In contrast, tort laws govern situations where one person has harmed or injured another. Usually, professional liability claims grounded in one body of law or the other. There are various defenses available to the professional to ensure the claim against them falls in one of those categories (if any), but not both. A recent A&E decision would suggest otherwise, however.

March 3, 2016 • Professional Liability Matters, Sanctions

Judicial Criticism Leads to One Year Ban

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.