Professional Liability Matters

LATEST INSIGHTS

October 15, 2013 • Ethics, Legal Malpractice, Professional Liability Matters, Risk Management

The Ethics of Billing During Travel

Client billing and fee disputes are at the heart of a significant percentage of all malpractice claims brought against attorneys each year. There are myriad courses and guides for ethical billing available for all professionals yet lawsuits and administrative complaints abound regarding billing issues. However, even the most well-intentioned attorneys encounter situations where the “rules” of client billing are not crystal clear; perhaps none moreso than the debate regarding billing for travel.

October 10, 2013 • Insurance Products, Legal Malpractice, Professional Liability Matters

Eroding Policy Limits Spur Litigation

Professional liability insurance policies each contain limits of liability that set the upper threshold that the insurer will fund. However, a policy’s stated limit does not necessarily correlate to the amount that will be available to resolve a claim. Instead, many policies provide that the costs of defense are included within the coverage limit—every dollar spent on defense correspondingly erodes the amount available to resolve the claim. These so-called eroding limits, or defense-within-limits policies become particularly important in heavily litigated cases, where high defense costs can approach, and sometimes surpass, the total limit of liability.

October 9, 2013 • Medical Malpractice, Professional Liability Matters

A-Rod Sues Yankees Doc For Malpractice

In the midst of his appeal of a 211-game suspension arising from the alleged use of performance enhancing drugs, Alex Rodriguez just filed the anticipated malpractice suit against a Yankees’ team physician. Professional Liability Matters posted of the rumblings of a malpractice suit in August. Now, the other shoe dropped. Although the allegations are serious, many speculate that A-Rod’s real goal of this lawsuit is to distract from A-Rod’s steroid controversy and to deflect blame.

October 8, 2013 • Insurance Products, Professional Liability Matters, Settlement

Stop; Hammer (Clause) Time

Litigation is big business with big dollar signs. As a result of the large awards that can result from malpractice suits, many professionals, their attorneys, and insurers are interested in early settlement discussions. When considering settlement, the defense team must balance “right and wrong,” pride, defense costs, and other complicated factors that are difficult to quantify. For the professional, the decision may be more about reputation and morals than budgets. As a result, insureds may not always want to follow their insurer’s inclination to settle. Enter the “hammer clause.”

October 3, 2013 • Accountants, Professional Liability Matters

Hefty Audit Malpractice Case Dismissed due to Lack of Reliance

It is inevitable that blame will be cast on the auditor: when an investment tanks, when embezzlement is discovered, when stocks take a plunge. It is the independent auditor that concluded that the financial statements were presented fairly and therefore the auditor should have uncovered the ______________. Many plaintiffs follow this script. As a result, the defending auditor is left to argue that he is not responsible for the intentional acts of others or unforeseen changes in the underlying client’s business. This defense requires a fact intensive debate and the involvement of CPA experts; i.e. it’s expensive. A recent decision out of California, however, provides a strong argument for auditors that the plaintiff must establish actual reliance on the audit report in order to prove a claim.

October 2, 2013 • Legal Malpractice, Professional Liability Matters

Certificate of Merit Blunder Results in Dismissal

A growing number of states have enacted some version of an “affidavit of merit” statute in professional malpractice matters. The intended purpose behind these laws is to reduce “unnecessary” or unsupported lawsuits. In states such as Pennsylvania, New Jersey, and others, plaintiffs in malpractice litigation must certify through an impartial professional in the defendant’s field that there is a fundamental basis for the complaint. While the specifics of the particular statute in each state may differ in terms of scope and application, the importance of compliance cannot be overstated. A pro se litigant in New Jersey recently learned this lesson the hard way.

October 1, 2013 • Medical Malpractice, Professional Liability Matters

A Significant Blow to Med-Mal Reform

Medical malpractice reform has been on virtually ever state’s legislative agenda for the past several years as a result of a concerted effort by the defense bar and public interest groups to insulate physicians from frivolous suits. In an effort to curb rising healthcare costs, a variety of legislation imposing prerequisites on medical malpractice suits has been passed by a number of states. Rather than simply imposing damages “caps,” some states are getting creative with their reform legislation. However, a recent decision by a Florida federal judge dealt a major blow to those efforts.

September 27, 2013 • Ethics, Professional Liability Matters

Arbitrator’s Conflict Voids Arbitration Award

We previously warned of the risk that settlements purportedly achieved at mediation may unhinge due to the failure to document the settlement terms. Along those lines, a recent decision highlights the effect of an arbitrator’s failure to disclose his connection to a party. Many attorneys are chosen as an arbitrator due to their reputation in the community or personal/business relationships. Accordingly, there may be some heightened risks of potential conflicts, as seen here.

September 26, 2013 • Accountants, Professional Liability Matters

A First of its Kind: FDIC v. Independent Auditor

A recent decision in a closely watched accounting malpractice matter – the first of its kind initiated by the FDIC – may suggest cause for concern for accountants. As receiver for a failed bank, the FDIC may sue professionals who played a role in the failure of the institution. In the wake of recent bank failures, the FDIC has targeted officers and directors, attorneys, and brokers. Until recently, however, the FDIC had not pursued an audit firm. That all changed on November 1, 2012 when the FDIC, as receiver for the failed Colonial Bank, initiated a $1 billion malpractice claim against the bank’s auditors PricewaterhouseCoopers and Crowe Horwath. This lawsuit, and a recent decision denying the defendants’ motion to dismiss, raise critical questions.

September 24, 2013 • Ethics, Professional Liability Matters, Risk Management

Boston’s Big Dig Spawns Big Malpractice

Boston’s “Big Dig” continues to spark lawsuits 15 years after construction was completed. The most expensive US highway project – in excess of $24 billion – the Big Dig rerouted a major highway in Boston into a 3.5 mile tunnel. The project was plagued by delay, leaks, design flaws, and substandard materials. Ten years after completion of the project, in 2006, 26 tons of ceiling tiles and concrete became dislodged, fell and killed one motorist, injuring others. Reportedly, the National Transportation Safety Board blamed the collapse on faulty epoxy. In the most recent lawsuit arising from this incident, an insurance carrier sued its attorneys for malpractice for allegedly failing to disclose a conflict of interest.