Legal Developments and Risk Management Tips Impacting the Professional Liability Community.
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.
A dispute over unpaid bathroom break time at the office has resulted in an employer flushing away some $1.75 million as a result of violating the FLSA. The case arose when the Labor Department filed suit against a publisher after discovering that its employees were not earning the $7.25 hourly minimum wage during “personal breaks.” Pursuant to the employer’s policy, employees were required to clock out while using the bathroom, getting a drink or similar breaks.
The Model Rules of Professional Conduct prevent lawyers from representing conflicting clients. A conflict of interest may arise when the representation of one client will be directly adverse to another client. Just how far the requirement of “directly adverse” may extend was recently addressed by the Massachusetts Supreme Court in an interesting case involving IP litigation. While one inventor retained Firm to represent him on screwless eyeglass hinges another inventor had already retained Firm to secure a related patent in the screwless eyeglass market. Read on to see who got screwed.
Insurers are entitled to make decisions as to the professionals they will insure and the terms of the relationship. To that end, insurers expend considerable energy evaluating risks and assessing the likelihood of a potential claim. The scope of underwriting and the key metrics may vary from carrier to carrier but without exception each insurer relies upon some form of insurance application. Insurers are entitled to rely upon the representations of their applicants and, when faced with a misrepresentation in an insurance application, have the right to deny coverage. Accordingly, we’ve cited previous examples of applicants caught in a lie in their insurance applications. Don’t do it. Consider another recent example.
Pursuant to ABA Model Rule 1.10, a single attorney’s conflict of interest may be imputed to the entire law firm. The Rule provides that while lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so under the Rules. It is not uncommon for lawyers to have different associations with a particular firm—for example the term “of counsel” is often used to designate a role different from the traditional partner or associate positions. This may beg the question what level of involvement must an attorney have in order to be “associated with” a particular firm for conflicts purposes. A recent case out of the U.S. District Court of New Jersey involving a “seconded” attorney addressed just this issue.
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.
Combating bullies has recently become a trending topic, particularly with the rise of bullying on social media. However, in the legal world, bullies also run the risk of being sanctioned, as a recent fashion copyright infringement case illustrates. The suit, filed by graffiti artist RIME against fashion label Moschino, alleges illegal copying of a design. In response to the designers’ motion to dismiss, RIME filed its own motion, based in part on abuse of process. According to RIME, the designers’ motion to dismiss is a tactical and intentional attempt to scare and burden RIME in the hope that he will retract his lawsuit.
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.
Pro bono activities are not unfamiliar to most attorneys. Many attorneys will volunteer their time with organizations that provide pro bono legal services to those who could not otherwise afford legal representation. Most jurisdictions permit volunteer attorneys to be on a list of counsel that the court may appoint when a party is in need of representation. Some states may even assign attorneys in good standing to a court appointed representation. What happens though when that court appointed attorney allegedly commits malpractice in the course of the pro bono representation? A recent case out of Illinois addressed this scenario in the context of a court appointed child representative.
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.