Legal Developments and Risk Management Tips Impacting the Professional Liability Community.
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.
Lawyers wear many hats; the key is not to wear them all simultaneously. Many lawyers are well versed in areas outside of the law and can be a source of non-legal knowledge for clients. However, lawyers need to be mindful when their services extend beyond the traditional landscape of legal advice. Mixing business interests and legal advice can easily get you in hot water if the transaction goes awry. Take for example the case of Burk & Reedy, LLP v. Am. Guarantee & Liab. Ins. Co., in which a professional liability insurer denied coverage for an attorney that was involved in both the legal and business aspects of a transaction.
The Constitution guarantees the right to an impartial jury. This right is critical to ensuring a fair trial. While not specifically outlined in the Rules of Professional Conduct, it should go without saying that an attorney may not interfere with a party’s right to a fair trial. Nonetheless, PL Matters would have considerably less to discuss if professionals always followed the rules. Take for example the following case out of Texas where an attorney learned the hard way not to tamper with the jury process.
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.
An employee handbook is a necessary and familiar workplace fixture. A recent trend among employers is the inclusion of a mandatory arbitration clause, to avoid a jury trial in the event of employment-related litigation. Both state and federal courts have recently grappled with the validity of arbitration clauses in the employment litigation realm, and have both concluded that such clauses are not enforceable. These cases serve as a reminder that an employer must be vigilant should it wish to make such a clause part of its employment policies.
As you are undoubtedly aware, Professional Liability Matters previously circulated this handy table addressing the various affidavit of merit requirements throughout the country. Generally, in jurisdictions that require it, an affidavit of merit is necessary in order to maintain a malpractice claim against specified professionals, often including attorneys. But what is a “malpractice claim”? Suing a professional does not always equal malpractice. For example, a claim for malicious use of process is based upon a different standard than negligence. So this raises the question, is an affidavit of merit still required? In a case of first impression, a New Jersey Appeals Court recently ruled that it is not.
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.