Legal Developments and Risk Management Tips Impacting the Professional Liability Community.
Many professionals travel frequently. Hence, professionals may accumulate various rebates, discounts, frequent flier miles or “cash-back” as a result of travel or credit-card incentive programs. Over the years there has been some chatter amongst tax-preparers as to whether those travel-related or purchase perks are considered taxable income. Let’s take a closer look at this risk management issue facing the accounting profession.
Group coupon websites are a popular marketing ploy among a variety of service providers. The concept behind Groupon, Living Social, and similar sites is for consumers to select from local deals for discounted services. Typically, once a threshold number of coupons are sold, the service provider and the website share the proceeds. The professional liability community has caught on to this marketing trend and is taking notice. However, be aware professionals; utilizing similar group coupon sites is risky due to ethical limitations.
In most circumstances an attorney may only practice law in jurisdictions where she is licensed. Practicing law in a foreign jurisdiction may expose the professional to prosecution for the unauthorized practice of law. The Ohio Supreme Court recently considered whether an attorney who is not licensed to practice in the jurisdiction is subject to the forum state’s disciplinary authority in Disciplinary Counsel v. Harris, 2013-Ohio-4026 (Ohio Sept. 26, 2013).
The October edition of Professional Liability Monthly is now available for download. Please click the continue reading link below to access the newsletter.
The below cases correspond with the October edition of Professional Liability Monthly and the analysis of each case.
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.
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.
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.
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.”
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.