March 2007

The Accountant/Attorney Liability Reporter

Inside this issue:

Massachusetts Court Rules That Defendant May Seek Contribution From Plaintiff’s Counsel For Malpractice

A Massachusetts Superior Court Judge recently ruled that a defendant in a negligent misrepresentation case may implead plaintiff’s counsel and recover contribution on the theory that plaintiff’s counsel committed legal malpractice and therefore could be jointly liable in tort to the plaintiff. Although the court ultimately dismissed the third-party complaint for failure to state a cause of action, the ruling signals an expansive treatment by at least one trial judge of existing law regarding attorney liability.

Pension Protection Act of 2006 Alert: Potential Pitfalls, Penalties and Blacklisting for Appraisers – and Accountants, Attorneys and Fiduciaries?

On August 17, 2006, the Pension Protection Act of 2006 (“PPA”) P.L. 109-280 was signed into law, burying among its many technical pension plan and charitable changes, a new civil penalty1 directed at appraisers; and a backdoor revision to Circular 230’s sanction provisions expanding the Treasury’s ability to blacklist appraisers. While it will be important to understand when the penalty might be triggered and under what standard (or lack thereof) an appraiser might now be sanctioned under Circular 230, the pitfalls presented by the question of when an accountant, attorney or fi duciary will be considered an “appraiser” for the purpose of the new penalty is of most concern.

Litigating In The World of Electronically Stored Information: An Overview of the Amended Federal Rules of Civil Procedure

On December 1, 2006, The Amendments to the Federal Rules of Civil Procedure concerning electronically stored information (“ESI”) took effect. As explained below, these amendments address the 21st century world of electronic data and policies (“DMPs”), regardless of whether they are currently involved in the litigation process.

First Circuit Upholds Decision Requiring Repayment of Corporate Indemnifi cation

In our March 2006 Liability Reporter, we reported on the Federal District Court for the District of Massachusetts decision allowing a corporation to recover attorneys fees advanced to a corporate director in an SEC civil enforcement action pursuant to an indemnifi cation clause in the director’s contract. See Happ. v. Corning, Inc., et al., No. 03-11258 GAO (D. Mass. November 28, 2005). On October 20, 2006 the U.S. Court of Appeals for the First Circuit affirmed the District Court’s decision.

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