The Accountant/Attorney Liability Reporter: February 2004
Inside this Issue
Accountants: Protect and Collect with an Engagement Letter
For practicing accountants, a major source of litigation stems from clients’ allegations that their accountant failed to perform services that were outside the scope of the accountant’s engagement. Fortunately, there is a straightforward and cost-effective way to greatly reduce the risk of such litigation: the engagement letter. An engagement letter can reduce the risk of lawsuits by removing doubt about the nature and scope of the agreed-upon services. Without a properly drafted engagement letter, such litigation can be a time consuming and costly nightmare. With an engagement letter appropriately tailored to the practice and scope of services to be covered, an accountant can greatly decrease the risk of controversy and increase the chances for speedy and favorable resolution of claims.
The Sarbanes-Oxley Act and Private Companies: Understand the Implications
By now just about everyone in corporate America has heard about the Sarbanes-Oxley Act of 2002, which was enacted with much fanfare in response to several notable corporate scandals involving large publicly-held companies. Although the Act and subsequently enacted interpretive rules are intended to address the corporate governance practices at public companies and the conduct of the professionals who serve them, such as accountants and lawyers, a number of the Act’s provisions can impact private companies, both currently and in the context of future dealings that these companies may engage in.
Lender’s Counsel Granted Summary Judgment on Claim by Borrower
In a legal malpractice action brought by a residential real estate purchaser against the lender’s closing attorney, a Massachusetts Superior Court judge awarded summary judgment to the attorney after concluding that no reasonable jury could find that either an attorney-client relationship existed between the plaintiff and the defendant, or that the defendant otherwise owed a duty to the plaintiff. Fistel v. Torrey, et. al, 16 Mass. L. Rep. 479 (2003).
The Massachusetts Appeals Court Confirms that Mere Negligence will not Give Rise to a Claim under M.G.L. Ch. 93a
In a claim by a patient against a doctor for violation of Mass. Gen. Laws c. 93A (Massachusetts Unfair Trade Practice Act), the Massachusetts Appeals Court affirmed summary judgment in favor of a doctor, finding that the facts in the light most favorable to the plaintiff amounted to nothing more than negligence and there was no support for the argument that the doctor’s actions towards the patient were unfair or deceptive. Darviris v. Petros, 59 Mass. App. Ct. 323 (2003).
Court Denies Emotional Distress Damages in Legal Malpractice Action
A Massachusetts Superior Court judge recently ruled that the plaintiffs could not recover emotional distress damages in a legal malpractice action. See Iacono et al. v. Boncore et al., 2003 Mass. Super. LEXIS 270.
Reversible Error in Legal Malpractice Action Found in Exclusion of Written Offer of Employment as Proof of Causation and Damages
In a legal malpractice action in which a client claimed he relied on his attorneys’ negligent advice concerning an employment contract, the Massachusetts Appeals Court reversed the trial court’s dismissal, ruling that the client had the burden but should have been given the opportunity of demonstrating that he would have reached a more favorable outcome with his employer had the attorneys exercised adequate skill and care. Shimer v. Foley, Hoag & Eliot LLP, 59 Mass. App. Ct. 302 (2003).
Rule 4.2 Permits Ex Parte Communications with Unrepresented Former Employees of an Organization
The Massachusetts Supreme Judicial Court (“SJC”) recently held that a lawyer’s duty to refrain from ex parte contact with represented parties, pursuant to Mass. R. Prof. C. 4.2, as amended, 437 Mass. 1303 (2002) (“Rule 4.2”), does not restrict ex parte access to an adverse party’s unrepresented former employees. Clark v. Beverly Health and Rehabilitation Services, Inc., et al., 440 Mass. 270, 275-76 (2003). In Clark, the SJC builds upon a trend evident in certain of its recent decisions, including Messing, Rudavsky & Weliky, P.C. v. President & Fellows of Harvard College, 436 Mass. 347 (2002) and Patriarca v. Center for Living & Working, Inc., 438 Mass. 132 (2002), which promotes free access to “material facts” and a “litigant’s need for information” over an “organization’s need to protect its legitimate interests.” See Clark, 440 Mass. at 275-76.
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