Any time a professional charges for advice, there is a risk of second-guessing if a client follows the advice and is disappointed — or if the client later believes that different advice should have been given. That is true when lawyers make recommendations to settle lawsuits, and it is true when accountants certify a company’s financial statements.
Claims against professionals and professionals’ defenses of those claims present distinct issues for business litigators. We understand those issues, and that is why professionals and their former clients have hired our firm for decades to evaluate, prosecute and defend professional liability claims.
Three sets of issues stand out in professional liability cases. One involves the requested advice — its scope, the expected consequences of following or rejecting it, different recommendations that could have been given (always with the benefit of hindsight), and the nature of the judgment the professionals exercised before providing the advice. Another concerns proof of causation and damage, as it can be difficult to link the advice to specific losses, even when there is a serious question about the nature of the advice. The third, which arises frequently, concerns professional liability insurance; the risk of claims that can threaten the business of professionals drives them to be well insured, and this insurance in turn makes professionals attractive targets for disappointed former clients.
As professional liability claims have gone from rare to commonplace, Schiff Hardin has achieved consistently favorable results — in settlements, at trial and on appeal. We have recovered millions of dollars on behalf of former clients challenging their professionals’ advice, and we have achieved favorable settlements and defense verdicts for professionals who have been sued by their former clients.
Claims Involving Lawyers
The types of claims that disappointed clients can bring against their former lawyers are as varied as the different kinds of advice that clients hire the lawyers to give. When lawyers get sued, they hire Schiff Hardin because we understand the need to get to the bottom of the case-within-a-case — the underlying litigation, transaction, estate planning or other matter for which the lawyers were originally hired.
We develop defenses driven by the evidence, and we do so by working closely with our clients to understand the advice that they gave and why they gave it. We understand how to simplify the evidence, fit it within professional standards, and present it to a judge or jury in a way that shows the reasonableness of the advice in light of the facts and circumstances.
We regularly consult and develop testimony on behalf of our clients from leading experts in legal ethics and professional standards. Three of our partners have taught legal ethics for many years at two of the country’s top law schools.
We also understand the importance of the attorney-client relationship. We know how crucial it is to build trust with our lawyer-clients, especially because they often feel stung by their experience with the client who has sued them.
And we know how to work cooperatively with our lawyer-clients’ insurers, including on the detailed budgeting and case assessments that insurers need in order to evaluate the strengths and weaknesses of claims, to set reserves, and to decide whether to press litigation through trial and appeal.
We have represented law firms accused of raiding their non-lawyer competitors’ employees, of suing their own clients, of aiding and abetting their clients’ wrongdoing, and of misrepresenting their qualifications for complex work.
Claims Involving Accountants
Bringing suit against auditors is exceptionally challenging, particularly claims contending that their auditors improperly certified a client’s financial statements. Few professionals can boast a larger war chest, a deeper bench of national law firms, or a wider array of defenses to marshal against their former clients — even when it is clear that the auditor’s conduct fell below professional standards.
Clients hire us to press claims against their former accountants because we understand how to navigate the complex standards on which liability often turn. We know how to rebut the frequently raised defenses that errors made by clients insulate them from responsibility for their own mistakes. And we understand how to link specific losses that clients have suffered to audit failures. As a result, we have recovered millions of dollars from auditors on behalf of our clients.
Claims Involving Other Professionals and Fiduciaries
Beyond claims involving lawyers and accountants, clients hire us to advise them concerning many other forms of potential professional liability, including claims turning on the alleged failure to meet fiduciary obligations. Clients hire us because we recognize both the unique contours of each matter and the consistent need to develop or counter evidence concerning the reasonableness of the professionals’ conduct. We understand how to present defenses that highlight business judgment and how to overcome those defenses, and we regularly investigate and handle claims of fiduciary disloyalty. We also understand the key effect that business and economic cycles may have on proving damages, and we are regularly called upon to evaluate whether those cycles provide a valid explanation for losses.
In recent years, we have represented and counseled trustees whose decisions have been questioned by beneficiaries or public officials. We also have successfully litigated dozens of cases involving claims of director-and-officer liability, malpractice by appraisers and other real-estate professionals, alleged misconduct in the issuance and sale of securities, and insurance-coverage disputes relating to these claims. Clients have entrusted us with some of their most complicated, sensitive and high-profile matters because we have a track record of successfully identifying the central evidence in each case that bears on professional standards, determining whether any violation of these standards has occurred or caused a loss, and working with clients to limit their risks or maximize their recoveries in the event of potential claims.