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Professional Liability Defense

Professional liability claims have been on the rise for years, and there is evidence these claims tend to increase sharply during difficult economic times, according to the American Bar Association’s Professional Liability Committee. Irrespective of the short-term economic picture, however, litigation has increased notably in many professions. For example, more lawsuits were brought against accountants during the 20 years through 1991 than in the entire history of the profession up to that point, according to the Journal of Accountancy, and that trend continues. Among factors contributing to the increase in professional liability claims are the nature of the U.S. legal system, legislative changes such as RICO and Sarbanes-Oxley, and the embracement of the “deep pockets” doctrine by many plaintiffs and plaintiffs’ attorneys.

Today, it’s not unusual for headlines in the business, financial, and legal press to spotlight situations where professionals of various types stand accused of alleged malfeasance in work performed for both public and private entities. Lawyers, accountants, architects, engineers, consultants, and corporate officers and directors all face exposure on this front. Often, these cases arise from extremely complex transactions and business deals. Resolving professional liability cases in the best interest of individual defendants requires a legal defense team with a broad range of knowledge and a deep well of experience, and that’s just what clients find in LeClairRyan’s Professional Liability team.

Whether a professional liability client’s ultimate goal is seeing a trial through to victory or reaching a favorable negotiated settlement, our attorneys have the legal skills, industry-specific knowledge and background, and ethical grounding to make it happen.

Our Professional Liability services include:

Legal Malpractice Defense

Historically, malpractice claims against lawyers escalate during economic downturns. Legal scholars cite three main reasons for this: assets lose value, deals lose traction, and some attorneys start practicing outside their core areas of competency. No matter what the precipitating factors might be, however, accusations of misrepresentation or poor conduct represent a potential threat for all kinds of law firms and in all economies. Faced with that unwelcome eventuality, many law firms and individual attorneys turn to LeClairRyan’s Professional Liability team. Our malpractice defense attorneys have been representing, counseling, and defending law firms and attorneys in legal malpractice matters for many years. In the process, we have earned a strong reputation for our ability to take cases to trial and obtain verdicts favorable to the defendant.

Our approach to legal malpractice defense is painstaking and thorough. We immerse ourselves in the details and nuances of the claims made against our clients, bolstering our ability to craft a superior strategy whether the case ends up going to trial or being settled out of court. We have access to a tremendous in-house reservoir of legal talent and broad-based knowledge in the form of our deep bench of attorneys, and we tap into it as often and as deeply as needed. When necessary, we also leverage outside resources to gain intimate knowledge of a plaintiff’s particular business and/or to provide us with a better understanding of the type of claim being brought against our client.

Our Professional Liability team attorneys have broad experience in defending lawyers and law firms in legal malpractice actions in both state and federal courts, in alternative dispute-resolution venues such as arbitration proceedings, and before professional licensing and disciplinary boards. We routinely serve as expert witnesses in ethics and professional liability hearings and provide personal counsel in negligence actions. Our team members who focus on legal malpractice defense are committed to staying abreast of the latest developments in this practice area, including the multitude of constantly changing ethics rules in the many jurisdictions in which we practice.

At LeClairRyan, we also offer consultative and advisory services to law firms and individual attorneys in the areas of risk management and professional responsibility. We have several experienced partners and associates on our Professional Liability team and are able to provide clients with a high level of personal attention.

No matter what type of case is involved, we approach every engagement with the same perspective. We work closely with our clients at the outset to identify their needs, then allocate and manage our resources in the most efficient manner possible to achieve their goals. Our resource-management strategy is designed to provide maximum value to our clients and help them make the most efficient use of their own resources.

Our Professional Liability team attorneys have earned a well-deserved reputation for their experience, expertise, knowledge, and ethics among their peers in the profession. Insurers frequently refer us to other attorneys in professional liability actions, and our team members are often sought out by members of the media for comment on high-profile legal ethics issues.

Accountant Malpractice Defense

“Nothing succeeds like success,” as a saying popularized in the 19th century puts it, and that’s an apt description of our Professional Liability team in the area of accountant malpractice defense. Our attorneys have forged a reputation for taking these cases to trial and winning. As a result, plaintiffs often are eager to settle these cases when they learn that clients have turned to LeClairRyan’s attorneys to defend them. In a number of cases, we have been successful not only in defending our clients, but also in obtaining compensation for them.

Decades of experience and a trove of institutional knowledge characterize our team and have played important roles in our successful defense of a wide variety of accounting practices—national firms, regional firms, small firms, even solo practitioners. We have successfully handled many different types of malpractice claims in venues ranging from federal and state courts to alternative dispute-resolution forums. Our attorneys who focus on accountant malpractice defense have strong financial and economic backgrounds and are fluent in the language of accountancy. They are adept at reading and understanding accounting and auditing documents and financial statements of all types. In the rapidly-changing regulatory environment in which accountants ply their trade these days, our attorneys stay on top of the latest developments and are keenly attuned to the potential impacts of tax-code changes on the practice of accounting.

As with all engagements undertaken by LeClairRyan, we begin accountant malpractice actions with a concentrated effort to identify and understand the needs of our clients and to analyze the details and nuances of their individual cases. We have access to a tremendous in-house reservoir of legal talent and broad-based knowledge in the form of our deep bench of attorneys, and we tap into it to whatever extent needed. When appropriate, we also leverage outside resources to gain intimate knowledge of a plaintiff’s particular business and/or to provide us with a better understanding of the type of claim being brought against our client. We stress efficiency and thoroughness in pre-trial preparation, always keeping our clients’ best interests first and foremost. We are proactive in anticipating plaintiffs’ actions and strategies, positioning ourselves to swiftly deflate and refute plaintiffs’ claims.

Our attorneys who focus on accountant malpractice defense have broad experience with accounting and auditing issues, including detection of employee defalcations (unauthorized takings), going concern disclosures, revenue recognition, inventory valuations, accounting for tax liabilities, valuations, internal controls, balance sheet presentations, and will and trust issues. We have served as counsel to accounting firms in securities class action suits and in suits by purchasers and sellers of businesses, banks, and other lending institutions. We represent accountants before professional boards with respect to licensing, client disputes, and ethical issues. We also represent accounting firms in connection with grand jury investigations.

As accountants expand the range of services they provide, their exposure also increases. We help them meet this challenge by offering risk-management services, such as contract and engagement-letter drafting and guidance on formulating document-retention policies, and we provide consulting services on issues such as electronic documentation and expansion of scope of services. We work with accountants on IRS-related matters, for example, providing assistance to produce documents, representing them at depositions, and providing advice on pre-claim matters. Several of our attorneys in this practice area have been recognized as “Super Lawyers” by Boston and Law and Politics magazines.

Representative engagements:

  • Defense of action brought by mutual funds alleging fraud and misrepresentation in connection with the securities offering statement on an $80 million bond issue.
  • Successfully defended a CPA firm against a claim of negligent misrepresentation in the preparation of financial documents, with the decision affirmed in the First Circuit Court of Appeals.
  • Successfully defended CPA firms in malpractice actions alleging failure to detect employee defalcation.
  • Successfully defended a CPA firm in a trial alleging fraud and misrepresentation in valuing accounts receivables pledged to a lender.
  • Successfully defended a CPA firm in a malpractice action involving a consulting engagement concerning the establishment of a deferred compensation plan.
  • Successfully defended a CPA firm in a malpractice action alleging failure to advise a client that an offshore deferred compensation plan was an illegal tax scheme.
  • Successfully defended CPA firms in malpractice actions alleging negligent preparation of tax returns.
  • Successfully defended CPA firms in malpractice actions alleging negligent preparation of financial statements.
  • Successfully defended a CPA firm in connection with an action alleging malpractice in setting up a financial plan and trust.

Architects and Engineers Malpractice Defense

Architects and engineers face increased exposure to charges of professional malpractice due to a variety of developments in recent years. The industry hosts a claims environment that is rapidly and continuously changing; there is wide variation among the numerous industry rules and ethical guidelines affecting architects and engineers; technology is changing the very nature of their professions; and economic pressures are mounting. On LeClairRyan’s Professional Liability team, we have experienced trial attorneys who are well-versed in all these areas, and who focus on the defense of professional liability claims in an industry where they have become so common that many owners and contractors consider professional liability policies to be just another source of project contingency funding.

Our Professional Liability attorneys have litigated hundreds of cases to successful conclusions for our clients, both in courtrooms and in front of arbitration panels, and have mediated hundreds more to similarly satisfactory outcomes. Key components of our success in this area are the level of preparation we bring to our work and our ability to leverage that preparedness—along with our attorneys’ courtroom experience—on behalf of our clients. We believe our trial experience in architectural and engineering malpractice defense is unmatched in the legal profession. As a result, we often are able to able to negotiate efficient, judicious settlements on behalf of our clients because claimants familiar with our reputation know our track record of trying cases successfully to conclusion.

Design professionals and their insurers across a broad geographic area have come to rely on our Professional Liability team’s reputation for excellence in representation and frequently refer us to colleagues. In addition to defending claims in state and federal courts, in alternative dispute forums, and before professional boards, we also advise clients on risk management to help them reduce exposure to future claims. At the request of many claims managers, underwriters, and insurance brokers, we are frequent presenters of on-site and Web-based seminars for architects and engineers on a broad range of timely topics relevant to professional liability, malpractice defense, and risk management.

Representative engagements:

  • Obtained summary judgment on behalf of a major engineering, construction, and project management company in a heavily contested alleged race discrimination matter relating to claims dating back nearly 10 years.
  • Successfully represented a design team and program manager in a multi-party $160 million contractor claim involving the so-called “smart system” on Boston’s Central Artery/Tunnel Project, one of the most complex construction projects in U.S. history.
  • Obtained dismissal of false claims act actions against design professionals on Central Artery/Tunnel Project.
  • Represented design professionals in multiple government investigations and state and federal grand jury proceedings.
  • Successfully defended an engineering firm in a claim by a university over a failed sporting field project and obtained recovery of fees on counterclaim.
  • Represented a national architectural firm in a multi-million dollar delay-damages and lost-profits claim by a Native American tribal casino and hotel complex, resulting in a confidential mediation settlement of less than 1.5% of the amount claimed.
  • Represented a regional architectural firm in a claim by a municipality and its insurance carrier for reimbursement of the costs of flooding due to improperly sized storm water piping during a 100 year storm, with the architect and its insurer paying no contribution to a settlement reached during mediation.
  • Advised design professionals on limited waivers of sovereign immunity, phased dispute-resolution clauses, and intellectual property licenses to accommodate the concerns of Native American tribal entities for gaming, hospitality, and infrastructure projects, while protecting the due process and collections concerns of design professionals.
  • Obtained summary judgment in U.S. District Court in a false claims act action against an international engineering firm involving allegations concerning overseas contracts.
  • Advised architectural and engineering firms on the implementation of Building Information Modeling (BIM) and the use of Integrated Project Delivery agreements on large institutional projects.
  • Obtained multiple summary judgments for architects and engineers in serious personal injury claims based on limitation of duty contract clauses.
  • Obtained summary judgment against the plaintiff State, overthrowing the ancient doctrine of nullum tempus, or “no time runs against the king,” because it is improper and unfair to allow the State to keep contractors, design professionals, and suppliers on the hook in perpetuity after they have completed work on a state construction project, and the applicable statutes of repose and limitation have run out.
  • Obtained a verdict in favor of an engineering firm in a waste water treatment claim.
  • Obtained a defense verdict for an architect in a death case arising from the design of a residential tower of a major Boston hospital.
  • Successful defense of death claims at a large, complex wastewater treatment plant.
  • Obtained defense verdicts in claims concerning the design and construction of a wastewater treatment facility, freshwater treatment plants, sewerage lines, and leaching systems.
  • Obtained defense verdicts in condominium design-defect water damage and catastrophic failure claims.
  • Successfully defended a joint venture engineer/general contractor in a multi-million claim by a municipality alleging defective design and construction of an air pollution control system at an incineration facility.
  • Successfully defended an architect in a U.S. District court action involving $13 million in damage claims arising from the design of a university life sciences building.
  • Substantial experience representing engineers and architects in licensure actions before the Boards of Registration.
  • Obtained multiple different defense verdicts in claims brought by homeowners against design professionals.
  • Obtained multiple different defense verdicts in cases brought against environmental professionals alleging substandard services.
  • Obtained multiple different defense verdicts for design professionals in cases brought by laborers and others.
  • Obtained multiple different defense verdicts in cases brought by owners, contractors, and sub-contractors seeking delay damages, cost of change orders and cost overruns.

Directors and Officers

Attorneys in LeClairRyan’s Directors and Officers practice advise boards of directors, board committees, and individual directors and officers on corporate governance and compliance issues, as well as other issues that senior executives may face. Our attorneys on this team have extensive experience in securities litigation, regulatory affairs, business litigation, corporate and securities issues, estate planning, and compensation and benefits. In addition, our attorneys have significant experience advising and representing corporate officers and directors in a variety of litigation matters, including claims based on alleged violations of federal securities laws. We are well-versed not only in the unique liability issues facing corporate officers and directors, but also in working with insurers on complex coverage issues. Our experience enables us to counsel senior executives on both the legal and business implications of various litigation defense strategies.

Among the services we provide are representation in connection with SEC investigations and shareholder lawsuits; defending litigation directed against directors and officers; and providing advice regarding securities law compliance, including compliance with the Sarbanes-Oxley Act of 2002, corporate law fiduciary duties, and other governance matters. Our Directors and Officers team attorneys also act as independent counsel to boards and board committees, advise on employment agreements and severance arrangements, and structure and advise on equity and equity-based incentive plans. We review and advise on directors’ and officers’ insurance coverage, and we advise executives on tax and estate planning, asset titling and asset protection, charitable planning, and personal investment transactions.

Representative engagements in SEC proceedings and lawsuits involving directors and officers:

  • Representing a number of executives, including the chief executive officer, president and chief operating officer, and chief financial officer, of a Fortune 200 company in a putative shareholder class action brought by one of the nation’s preeminent plaintiffs’ securities class action firms. The claim related to a decline in value of company stock following accounting-related disclosures. We also advised the company and its officers in connection with concurrent investigations by the SEC and the United States Attorney regarding the same events. In addition, we represented the company in connection with an SEC investigation into alleged insider trading by the chief financial officer.
  • Representing the former general counsel of a public company in the medical services business in a putative class action lawsuit filed by a number of hospitals alleging overcharging for services, and in concurrent investigations by the SEC and the Department of Justice.
  • Representing the former controller of one of the largest publicly traded retail jewelry stores in the country in connection with a putative class action filed against the company and several of its current and former officers regarding alleged securities fraud in connection with the company’s financial statements. We are also representing the company in connection with concurrent investigations by the SEC and the United States Attorney.
  • Representing a number of current and former senior officers of New York Stock Exchange-listed companies in SEC enforcement investigations involving accounting and financial reporting issues.
  • Representing an officer of a publicly-traded company in connection with accounting and other professional liability issues.
  • Representing an officer of a group of companies in connection with allegations of securities fraud and other alleged financial malfeasance.
  • Representing the chief executive officer of a Fortune 200 company, as well as the company itself, in a lawsuit by a former top executive alleging that the company breached an oral agreement to provide him with a specific severance package. The former executive named the CEO individually, alleging that the CEO had made misrepresentations to him related to the severance package. This representation involved a detailed examination of the workings of the compensation committee of the company’s board of directors and its work with various compensation consultants.
  • Defending the former chief financial officer of a publicly-traded company in a suit alleging breach of fiduciary duty.

Representative engagements in corporate governance and compliance:

  • Advising the general counsel of a Fortune 500, New York Stock Exchange-traded company on all aspects of its Sarbanes-Oxley compliance program and corporate governance issues, including board committee charters, a director self-evaluation program, and a whistleblower program.
  • Representing the chief executive officer of a New York Stock Exchange-traded company in connection with a state regulatory investigation of the company’s business operations, and federal securities law disclosure obligations with respect to the investigation.
  • Conducting director seminars on current issues in corporate governance, including securities law issues and Sarbanes-Oxley compliance, for directors of several publicly-traded companies.
  • Acting as special counsel to audit committees of publicly-traded companies.
  • Advising the independent trustees of a mutual fund on their fiduciary duties and securities law obligations, their liability as trustees, and limitations on their liability and indemnity under state law and the fund’s organizational documents.

Representative engagements in directors’ and officers’ insurance:

  • Providing an independent review of a New York Stock Exchange-traded company’s directors’ and officers’ insurance policy to its chief executive officer.
  • Providing an independent review of a mutual fund’s directors’ and officers’ insurance policy to the independent trustees of the fund.

Representative engagements in employment and severance agreements and incentive arrangements:

  • Representing the chief executive officer of a New York Stock Exchange-traded company in connection with amendments to his employment agreement and establishment of his 10b-5-1 plan.
  • Representing a New York Stock Exchange-traded company in negotiation of employment agreements and an equity compensation program for key executives.
  • Advising the president of a publicly-traded industrial company in the negotiation of his employment contract, equity incentive arrangement, and golden parachute.
  • Advising the compensation committee of a New York Stock Exchange-traded company in connection with severance arrangements for its former president.
  • Representing a publicly-traded company with respect to the design, implementation and maintenance of employee benefit and executive compensation plans.
  • Advising a publicly-traded company regarding mitigation strategies to minimize the golden parachute excise tax related to change-of-control payments to executives.

Representative engagements in estate planning and personal investment transactions:

  • Representing the chief executive officer of a New York Stock Exchange-traded company in connection with personal equity investment transactions.
  • Representing several chief executive officers and other executive officers of New York Stock Exchange-traded companies with regard to their personal tax and estate planning, insurance planning, charitable planning, asset structuring, and asset protection planning.
  • Representing directors and officers in connection with complex estate plans with special consideration to planning for public equity offerings and executive deferred compensation and retirement arrangements.
  • Representing various directors and officers in their diversified personal investment transactions.
  • Representing the founding executive of a financial services company in his acquisition of several unrelated businesses for family members, and in connection with issues relating to fractional private jet ownership.

Representative engagements in directors and officers litigation defense:

  • Defending the former general counsel of a publicly-traded company in the medical services industry in connection with an SEC investigation and multi-jurisdictional litigation involving allegations of fraud and RICO violations.
  • Defending the former controller of a publicly-traded company in connection with a putative class action alleging violations of federal securities laws.
  • Representing several officers of a major national financial institution as co-counsel in connection with a securities class action.
  • Advising the chief executive officer of a publicly-traded insurance company in connection with Medicare fraud litigation pending against the company.


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