There may be a double "whammy" in being a legal malpractice defendant. In addition to being a defendant, the plaintiff may be obligated to report you to the Attorney Registration & Disciplinary Commission (ARDC) if the alleged malpractice misconduct violates Rules 8.3(a), 8.4(b) or (c) of the Illinois Rules of Professional Conduct ("Rules"). This mandatory reporting heightens the stakes of any malpractice claim and may complicate the defense of the case.
What the legal malpractice rules requireRule 8.4 (b) and (c) describe particular types of lawyer misconduct:
8.4. It is professional misconduct for a lawyer to
If any violation of 8.4(b) or (c) is part of a legal malpractice complaint, a report by plaintiff's counsel is mandatory. The 2010 revisions to the Illinois Rules of Professional Conduct state:
Rule 8.3 Reporting Professional Misconduct provides:
Effect of an attorney’s failure to report misconduct of anotherIn In re Himmel, 125 Ill. 2d 531 (1988), the Supreme Court made clear that the failure of an attorney to report another attorney's misconduct, was, in and of itself, an ethical violation. In 2000, the court added clarity to the requirement. Filing a legal malpractice complaint and thereby advising the trial court of the misconduct does not discharge the ethical duty of the lawyer to report misconduct under Rule 8.3(a). Skolnick v. Altheimer & Gray, 191 Ill. 2d 214, 229 (2000).
Rather, the report must be made to a tribunal "empowered to act" on the reported misconduct. Id. The court in Skolnick made clear that a trial court is not the proper authority to enforce the ethical rules, that is not the trial court's role. So merely filing the complaint does not constitute a "report". Id. In Illinois, that authority is exclusively delegated by the Supreme Court to the Attorney Registration & Disciplinary Commission ("ARDC"). Skolnick, supra at 229. In the Rule amended in 2010, the report must be made to the "appropriate professional authority", which almost always is the ARDC.
Obligation of legal malpractice plaintiffsFor the legal malpractice plaintiff, it is important to be attuned to this requirement and make sure you have solid "knowledge" supporting your pleading that at a minimum meets the pleading requirements of Illinois Supreme Court Rule 137. Rule 137 provides in pertinent part:
If your complaint allegations are sufficient under rule 137 and the allegations fall within the parameters of 8.4(b) or (c), you must report. It is important that any legal malpractice complaint be solidly supported by facts, but it is even more important if the complaint filing will trigger this ARDC reporting requirement.
Skills required of legal malpractice defense counselFor the legal malpractice defendant, it is possible you will be conducting a dual defense: in court and before the ARDC. For the defendant who is in this situation, it might be advisable to ensure your legal malpractice attorney has practiced before the ARDC or that defense counsel is willing to partner with someone who is experienced in appearing before the ARDC. Obtaining this expertise should not come after the ARDC decides to file charges. It is needed when the defendant is initially responding to an ARDC inquiry. In other words, earlier is better.
For all parties a complaint alleging misconduct that falls under Rules 8.4(b) and (c) raises serious ethical issues. At every stage, counsel for each side must be cognizant of the implications of the allegations from both a liability and ethical perspective.
For more information about this topic, contact Sara E. Cook at McKenna Storer.
If you enjoyed this article, you may enjoy other malpractice law articles by our attorneys.
This post was originally published at https://www.mckenna-law.com/blog/legal-malpractice-claim-ardc/
How Much Underinsured Coverage Is An Insurance Company Required To Pay When There Are Multiple Tortfeasors?
Insurance coverage for underinsured and uninsured motorist coverage lawsare often times confusing. One source of such confusion is the determination of coverage owed when there are multiple tortfeasors. The recent case of Illinois Emcasco Ins. Co. v. Tufano, 2016 IL App (1st) 151196 provides guidance in this circumstance.
A passenger in a car that collided with another car resulting in injuries claimed to be in the millions of dollars. The passenger sued both drivers. One driver had a $100,000 insurance policy that was tendered in full. The other driver had a $300,000 policy that was also tendered, resulting in a payment of $295,000 under that policy. The injured passenger had an underinsured motorist policy in the amount of $500,000 with Illinois Emcasco Insurance Company.
The issue in this case was whether Emcasco was required to cover the difference between what was received from the two drivers collectively and the $500,000 underinsured policy, for a total of $105,000. Or, whether the $500,000 underinsured coverage could be applied to each driver separately, for a total of $605,000.
The underinsured motorist coverage in the Emcasco Policy provided:
“Underinsured Motorists Coverage”
LIMIT OF LIABILITY
The limit of liability shown in the Schedule or in the Declarations for Underinsured Motorist Coverage is our maximum limit of liability for damages because of ‘bodily injury’ resulting from any one accident. This is the most we will pay regardless of the number of:
Where multiple tortfeasors are involved and the insurer wants to offset the collective payments made by all tortfeasors against the underinsured coverage, the plain language of the policy is not the end of the inquiry. The court also considers whether application of the policy language violates the public policy behind the underinsured motorist statute.
Outcome of the Illinois Case Illinois Emcasco Ins. Co. v. TufanoThree principles emerge from the Illinois case law:
Ultimately, the Court determined that, where multiple tortfeasors are involved in an accident in which an underinsured motorist policyholder is injured, the policyholder must be placed in the same position as if each tortfeasor carried the same amount of insurance as the policyholder. One tortfeasor’s payment cannot be used to offset the underinsurance gap of another tortfeasor; each instance of underinsurance must be viewed distinctly. However, the amount of coverage the policyholder can receive from the underinsured motorist carrier is capped by the overall limit of the underinsured motorist policy, because the insurer should not be required to pay a policyholder more than was promised or more than the amount for which the policyholder paid in premiums.
While the determination of underinsured insurance coverage involving multiple tortfeasors may be a difficult determination to make, insurers can rest assured that Illinois insurance law will not require a payment over and above the underinsured policy limit.
For information about this topic or any other insurance coverage concerns, contact Kelly Purkey at McKenna Storer.
If you enjoyed this topic you may like to read these other Insurance Coverage articles by our attorneys.
This post was originally published at https://www.mckenna-law.com/blog/Underinsured-Coverage-Payments-Multiple-Tortfeasors
New accounting standards proposed by the Financial Accounting Standards Board scheduled to go into effect for the 2019 fiscal could affect how commercial leases are structured. As an executive or house counsel, if you are not aware of the changes or thought there was plenty of time to make your company compliant, time is running out. The new FASB standards cause dramatic changesto generally accepted accounting principles(GAAP) applicable to leases.
Current GAAP for finance and operating leases
There are two types of leases: Finance leases and operating leases. Each of them is currently being treated differently under GAAP. An asset acquired under a finance lease is deemed owned by the lessee. The payments made under the lease are shown as liabilities in much the same way as payments on a loan for accounting purposes. Accounting principles treat finance leases as the financing vehicle by which your organization acquires assets.
In sharp contrast to finance leases, operating leases are the means by which a lessee acquires the ability to use an asset without claiming any ownership rights to it. Accountants applying current GAAP rules report operating lease payments on a company’s income statement, but they do not include the payments or the value of the asset on its balance sheet.
Identifying a lease as either a finance lease or operating lease is accomplished by looking for the following four characteristics of a finance lease:
How FASB changes affect GAAP beginning in 2019
Known officially as “FASB Accounting Standards Update No. 2016-02, Leases (Topic 842),” the new rules require recognition of operating leases on balance sheets and income statements.
Both operating leases and finance leases must be reflected on a company’s balance sheet under the new FASB rules.
The value of the asset and the payments made under the lease must be reported on a company’s balance sheet under the new standards. This is an oversimplification because the new FASB rules require special treatment by accountants for common lease provisions, including:
The complexity of the process of gathering the information needed to comply with the new GAAP under the changes approved by FASB requires immediate action by companies and their accountants and legal counsel. Publicly traded corporations must meet the new standards for all filings made after December 15, 2018 and for other companies beginning a year later.
<h2>Role of outside counsel helping companies comply with FASB standards</h2>
Companies with leased assets will need guidance and legal advice from attorneys knowledgeable in commercial real estate law to review leases to determine how they are structured in order to assist in mining the data required to properly report the assets and liabilities associated with them. The business law and commercial real estate law attorneys at McKenna Storer provide superior advice and representation in lease negotiations and reviews. For additional information about this topic, please contact them to schedule an appointment.
Accountants, attorneys and doctors are the professions that usually come to mind when people talk about professional liability insurance. Other professions, such as real estate brokers and agents, insurance brokers, and consultants should also consider obtaining coverage to protect them in the event of negligence, good faith violations and other claims by the people to whom they provide services.
Coverage provided by professional liability insurance
Businesses and professions holding themselves out to the public as experts in a particular field, such as law and medicine, are held to a standard for their particular profession. The standard could be set by law, by the industry or profession, or by the contracts under which a professional’s services are offered to a particular client. If the professional’s performance is below the standard, he or she could be sued for damages.
Professional liability insurance generally covers a business or professional for mistakes, omissions and negligence that result in financial harm to the client. For example, the failure of a professional to complete services for a client or completing them in a negligent manner could result in a claim for which an insurance policy would provide the following coverage:
Policies usually exclude criminal acts committed by the professional. For example, a claim against a financial advisor for stealing money from a client could be excluded from coverage as an intentional and criminal act.
Professions benefiting from liability coverage
Liability insurance for professionals goes by several names including, malpractice insurance and errors and omissions insurance. Included among the professions for which coverage is recommended are the following:
Other professions might also qualify for coverage if they offer services relying primarily on expertise gained through education, training and experience. An attorney practicing in the area of professional liability defense would be an excellent source of information and guidance.
Types of insurance liability policies
Coverage is offered as either a claims-made or occurrence policy. Claims-made policies are the most common, but coverage is limited to claims arising and filed during the period in which the policy is in effect. Occurrence policies cover events taking place during the effective dates of a policy even if the lawsuit or claim is not filed until after coverage lapsed.
Occurrence policies might benefit individuals leaving a particular profession through a career change or retirement because claimants might have time under a state’s statute of limitations laws to file a claim exceeding the effective dates of the policy. For instance, Illinois gives people at least two years to sue for malpractice, so a claim could be filed after a policy has lapsed. If the professional had a claims-made policy, he or she could be without coverage.
Our attorneys can help
The attorneys at McKenna Storer provide professional liability defense and insurance law representation to for doctors, lawyers and other professionals. For additional information about this topic, please contact them to schedule an appointment.
Whether you’re a physician, nurse, hospital or other health care service provider, a medical malpractice claim can be an unsettling and financially devastating experience. While most medical professionals readily call on a malpractice lawyer when defending claims that reach the litigation stage, it’s important to know there three important services medical malpractice attorneys can provide for you before a malpractice claim arises.
1. ADVISE YOU ABOUT THE TYPES OF MEDICAL MALPRACTICE POLICIES AND COVERAGE PARAMETERS
A medical malpractice claim against any health care professional or healthcare facility for could require an interpretation and explanation of the policy coverages. It’s not unusual for a health care provider lack complete understanding of the coverage types and limitations of their malpractice policy or professional liability policy, especially when that policy is purchased by their practice,
Claims-made and occurrence are the two types of policies offered by malpractice insurance carriers. A claims-made policy insures against claims made from incidents occurring while the policy was in effect. Both the reporting of the claim and the incident must occur while the policy is active. Once the policy lapses or is cancelled, the coverage ceases to exist.
Unlike a claims-made policy, occurrence policies insure against claims arising from incidents that occurring during the effective term of the policy. A claim filed after a policy lapses or is cancelled would still be covered provided the incident arose while the policy was in effect. The date a claim is actually reported is irrelevant because coverage is determined by the date of the incident.
2. REVIEW INSURANCE APPLICATIONS FOR MALPRACTICE COVERAGE
The information you furnish on an application for insurance should be reviewed by insurance counsel to ensure it is accurate and complete. If you fail to include information on your insurance application about any known incident that could lead to a claim or regulatory action, such as enforcement actions by the Illinois Department of Financial and Professional Regulation, they could later become the basis for a denial of coverage by the insurance company. Application review by experienced insurance counsel and identify potential problem areas, including omissions, before submission to the carrier and prevent coverage issues from arising in the future.
3. Helping to identify medical malpractice risks
A law firm well-versed in the nuances of medical malpractice and insurance law can help you identify and control areas of potential liability through risk management reviews, including:
Upon completion of a risk management review, recommendations can be made and implemented addressing problem areas posing liability or claims issues. Acting proactively can help healthcare professionals to reduce the occurrence of claims or to minimize the extent of the damages resulting when claims occur.
Our medical malpractice attorneys can help
The attorneys at McKenna Storer provide medical malpractice defense and insurance law representation to physicians, nurses, hospitals and other health care providers When you’re looking for attorneys with that understand the defense and prevention of medical malpractice and negligence claims, or would like additional information about this topic, please contact MckennaStorer or check out Medical Malpractice services on our website.
If you are a general contractor or the owner of a business associated with the construction industry, you might believe you only need to hire an attorney whose area of practice is construction law once a lawsuit is underway. In truth, litigation representation is only one of the many services a construction attorney provides. Knowledgeable and skilled legal representation can anticipate potential conflicts and help in avoiding construction litigation by offering practical strategies and solutions
Construction projects require more than a handshake
The days when developers began projects based only on trusting in the reputation of the other parties are long gone. Public and private construction projects are complex undertakings requiring detailed contracts and other documents containing the terms and conditions under which the parties will operate, including the following:
An attorney knowledgeable about the construction industry understands that negotiations undertaken before the commencement of a project must take into account all aspects of the parties’ relationship. Incorporating the results of those negotiations into a written agreement gives the participants a clear set of guidelines under which to operate and, in the event disagreements arise, a method of resolving them without resorting to litigation.
Contracts are not the only documents attorneys draft and review for their construction industry clients. Documents related to transactions for the purchase, sale and financing of commercial and industrial real estate should be reviewed and, when necessary to protect the client, negotiated and redrafted.
Representation when avoiding construction litigation is impossible
Despite your best efforts, your company could find itself in court. The construction industry in Illinois must navigate through countless state, local and federal regulations, including OSHA, environmental restrictions and non-discrimination rules. Engaging the services of an attorney to interpret the regulations and to help develop a plan for compliance also ensures that you have legal representation ready in the event of accusations of a violation.
Other litigation that might arise for which legal counsel could benefit your construction company includes:
Engaging the services of a law firm capable of providing your company with a variety of construction law services ensures you of litigation counsel who is thoroughly familiar with your company.
Getting help when you need it
The construction lawyers at McKenna Storer offer all of the services general contractors, insurance carriers and others operating in the construction industry may need. Contact them today for more information and to find out what they can do for you.
Too many Illinois business owners wait until a conflict with an employee or a contract dispute with another business has turned into a lawsuit before engaging the services of litigation defense law firm to represent them. By waiting too long, you could be limiting the ability of the attorney to avert costly and time-consuming litigation.
The role of a litigation defense attorney encompasses more than appearing in court to handle the trial of a lawsuit. Defense attorneys know that only a very small percentage of civil cases result in a trial, so the role of defense counsel begins long before a dispute ever reaches the courthouse.
Here are a three ways litigation defense law firm could help you with effective problem resolution, minimize your exposure, or shorter litigation:
1. Providing early investigation and evaluation
The ideal situation for your business is to engage the services of a law firm as soon a dispute or conflict arises. Regardless of when defense counsel is retained, he or she will begin an investigation. Depending upon the type of claim or dispute, this could include:
Following completion of his or her preliminary investigation of the claim, an attorney should be in a position to evaluate your company's exposure and make recommendations as far as resolution of the matter before it goes to court.
2. Initiating settlement discussions
By retaining a counsel early on, settlement discussions with the opposing attorney might be recommended by defense counsel following completion of the preliminary investigation in an effort to stave off or shorten litigation. Negotiations failing to reach a settlement of the dispute could nonetheless lead to agreement between the parties on some of the key issues to avoid having to litigate them.</p>
3. Pleadings and discovery revealing further areas for settlement negotiations
The commencement of litigation with service of a summons and complaint and the drafting of responsive pleadings, such as an answer and counterclaims, might lead to additional insight into the basis for the claim or additional evidence of a defense. Defense attorneys might take this opportunity to draft and file motions to dismiss or to affect the course of the litigation in some meaningful way.
The discovery stage when the parties exchange evidence and information about the case is another opportunity for the attorneys who are representing you to determine if additional settlement negotiations might be fruitful.
Engaging a Litigation defense law firm to resolve conflicts
Litigation counsel does much more than defend your business at a trial. The pre-trial stages of a case could offer opportunities for the attorneys for the opposing parties to engage in negotiations leading to settlement of all or some of the issues separating the two sides. As a business owner, the services of an experience top raking law firm, such as Mckenna Storer, could also provide you with advice and guidance about how to avoid similar conflicts and disputes in the future.
The start of the year usually brings with it new employment laws for your organization to incorporate into its compliance process. As employment law attorneys would warn you, the failure of a business to comply with state and federal employment laws can subject it to government regulatory sanctions and costly civil lawsuits. It can also irreparably damage an employer’s relationship with its employees.
ILLINOIS EMPLOYERS NEED TO STAY UP-TO-DATE ON CHANGES IN EMPLOYMENT LAWS
Sarbanes-Oxley, HIPAA, Gramm-Leach-Bliley and FERPA are just a few of the complex federal laws for which companies must establish compliance policies and procedures to ensure strict adherence to statutory requirements. If you’re an Illinois business, you’ll also need to stay up to date with changes in the various employment laws and regulations for Illinois. While overwhelming, every employer will take compliance seriously or risk run into a problem. If you are not aware of the latest legislative enactments and administrative regulations, then the potential for noncompliance and disputes with employees increase.
For example, the changes to the Illinois Right to Privacy in the Workplace Act went into effect on January 1, 2017. The changes expand employee protection against being forced by employers to grant access to personal online accounts. The law previously contained a much narrower definition of personal online accounts. The expanded definition could mean that your corporate compliance policies might be outdated and require changes to comply with the newest version of the law.
It is essential for an organization to have knowledgeable corporate counsel to keep management informed about employment law changes. Changes in the laws should trigger a review of current policies to ensure employment law compliance.
BEING PROACTIVE IN RESPONDING TO NEW LAWS AND AMENDMENTS
Once corporate counsel has identified employment law changes, management must review existing compliance policies to ensure they account for the regulations. Management is usually guided in this review by corporate legal advice. For those businesses without in-house corporate counsel, the services of employment law attorneys can provide the advice and guidance needed to facilitate changes to company policies and procedures, including:
Instead of waiting for a dispute to arise with an employee, it is better to commit the time to review your company’s corporate compliance policies as soon as you become aware of new laws or amendments to existing ones pertaining to the relationship between employers and employees. This proactive approach can help to avoid disputes with employees or sanctions by government or administrative authorities.
MAKE CORPORATE COMPLIANCE WITH EMPLOYMENT LAWS ONE OF THE DUTIES OF MANAGEMENT
It should be the responsibility of all managers to ensure the policies in place and applicable to their departments are current and compliant with current laws and regulations. Making managers accountable will encourage them to cooperate with corporate counsel and take the initiate in reviewing and identifying necessary changes to company policies pertaining to the employees working under their supervision.
SEEK COUNSEL FROM EXPERIENCED CHICAGO EMPLOYMENT LAW ATTORNEYS
If you have questions about employment law compliance or the role outside counsel can serve in your business, consult with an experienced employment law attorney. At McKenna Storer, our employment law attorneys have been helping employers with a wide range of employment law matters for more than 40 years. From establishing employment policies and procedures to representation of business owners in employment litigation and workplace disputes. For more information or to schedule a consultation, please contact McKenna Storer today.
Written and verbal agreements are the basis upon which Illinois businesses operate on a daily basis. Builders, developers and construction companies understand the important role contracts play in their industry. As any construction attorney knows, when a dispute arises about a construction contract, millions of dollars can be at stake as an entire project comes to a complete standstill until the dispute is resolved. If you are a general contractor or own your own construction company, a dispute over a contract can be financially devastating unless it is resolved right away. Here are four alternatives for resolving construction contract disputes used by commercial real estate attorneys and construction attorneys.
1. Informal negotiations
Many contract disputes arise over differing interpretations of the terms of the agreement regarding payment or the duties and obligations of the parties. Negotiation is, by far, the quickest method of resolving contract disputes. Advantages of negotiations over other methods of resolving contract disputes include:
Although there is nothing to prevent the parties to a contract dispute from negotiating directly with each other, it is usually better to have a contracts attorney representing you. Negotiations can result in heated exchanges between the parties, so having an attorney handling the negotiations on your behalf keeps the focus on the issues rather than on the personalities and emotions of the parties.
Mediation is similar to informal negotiations in that the goal in both instances is to reach a negotiated settlement. The key difference is the presence of a mediator who is an independent and impartial third party whose job it is to move the negotiations along, keep the parties focused on the issues and suggest areas of compromise.
The process of mediation is voluntary. The parties cannot be forced to participate in mediation, and the mediator does not have the authority to make decisions or compel either party to accept an agreement. The parties and their attorneys negotiate as they would in an information negotiation. Because the mediator is neutral, he or she can speak to each side in the dispute separately in an effort to find a common ground for agreement or to narrow the issues that divide the parties.
Parties who have attempted to resolve their contract dispute through informal negotiations might turn to mediation when they have not been successful in reaching an agreement. Even though the parties had their own attorneys representing them during the informal negotiations, the presence of a neutral mediator might help to bring the two sides together.
When informal negotiations or mediation have failed to achieve a resolution of a contract dispute, the parties could resort to arbitration. Arbitration is a process for the submission of a disputed matter to a neutral arbitrator who makes a decision after reviewing the testimony and evidence presented by the parties.
Arbitration is a formal proceeding controlled by the arbitrator in much the same way that a judge controls a lawsuit filed with the court. Arbitration awards are usually binding on the parties, but there might be a limited right to appeal to the courts. Contracts attorneys frequently include arbitration clauses in construction contracts to compel arbitration in the event of disputes. These arbitration clauses might include language establishing whether the arbitration is binding or nonbinding.
Using the court system to resolve a contract dispute is the most public and potentially most expensive method. A lawsuit must adhere to strict rules of procedure as established by state laws or by the rules of the court in which the case is filed.
A construction law attorney can help
A construction law attorney at McKenna Storer can offer you advice and guidance about the best method for resolving a contract dispute based upon the facts in your particular situation. Contact one of our attorneys for more information about this topic.
Privacy and Data Security Breaches Can Cost Your Company Millions: What Can You Do To Guard Against Cyber Attacks?
According to a report by IBM, privacy and data security breaches cost businesses an average of $4 million and can be even higher in industries that are heavily regulated. Companies that fail to take precautions to protect themselves from cyber attack could subject themselves to costly litigation filed by those whose data privacy has been compromised. Here are some suggestions for developing a cyber security policy to protect for your company.
Begin with a review of what you have and what you need to protect
The internet plays a key role in how most companies do business. The collection and transmission of customer data over the internet has become so comprehensive that Social Security numbers, addresses, dates of birth, purchasing histories and buying trends, and other sensitive customer information ends up in the possession of your company.
Protecting your company from liability for a data breach begins by analyzing the types of information you are collecting and devising a cyber security plan to protect it. Points to review with the individuals charged with the responsibility of protecting your company’s data include:
Assigning access to your company’s data
Establishing classifications and categories for the data controlled by your company allows you to then assign security access to only those individuals for whom access is essential to the performance of the tasks that are a part of their jobs. This also permits you to develop training protocols for employees based upon the different levels of access that you create.
Protecting data: passwords
Employees must be trained on the proper use of passwords. Requiring passwords that are random and complex with combinations of letters, numbers and special characters is a good start to securing your data. Unfortunately, even the most complex password is useless if an employee shares it with others. Sharing can be inadvertent as when an employee writes down a password instead of memorizing it. Periodic training and educating employees about the need to protect passwords and change them from time to time is essential to your company’s privacy and data security program.
Know the Cyber Security government regulations applicable to your company
The attorneys at McKenna Storer can provide corporate counsel services to your company, including reviewing the government regulations and cyber liability issues you should consider in preparing a cyber security policy. Contact Timothy M. Hayes for more information about this topic.