Business Ethics Chapter 7 Competence And Negligence Power Point Presentations There One Presentation And Slides

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Chapter 7

Competence and Negligence

Power Point Presentations: There is one presentation and it is 30 slides. It can be broken

down into two presentations. See the “notes” on the presentation. Please remember to review it

before showing it in class so that you can insert your own state law where indicated on the slides.

Chapter Hypothetical: For the answer to this issue, read the Tegmen case at the end of the

chapter. The issue is not that Perry is not competent. The issue is to what standard of care will

he be held. This hypothetical was taken from a UPL case. UPL is, of course, the other issue.

Lesson Objective: How is competence measured for lawyers? (pg. 204)

Lecture Suggestion: The key word in this section is “fiduciary.” It is a nebulous term.

Memorandum

To: Paralegal

From:

Date:

Re: Alferez: malpractice

You live and work in the state of ____________________________.

A new client (Alferez) has come to us. In addition to some corporate work we are doing for him, he wants to know if he has a legal

malpractice case against his former lawyer.

Alferez was involved in a serious automobile accident. His former lawyer failed to file the case against the other driver during the

time allowed under our statute of limitations. Now the other driver is unavailable so discovery regarding fault would be limited

even if we could file that action. The only action we can file is against the former lawyer but my concern is this: in some states the

To do this assignment, you can use the internet and Westlaw, but I suspect you will find more of our state law on the Internet.

I’ve tried to find the answers my students came up with (up with which my students came?!) but

cannot. This is another opportunity for us to collaborate so if your students do this assignment,

send their results to me and I’ll compile them for the website.

Lesson Objective: What is mental competence? (pg. 206)

Lecture Suggestion: This is a section of ethics that may slip through the cracks. In earlier

editions of this book, this topic was located in the section on Integrity, but it is just as easily

integrated into competence.

Activity Suggestion: Have your students find the Lawyer Assistance Program in your state.

Video Suggestion: California created a good video on this topic. You will find it (as a .wmv

file) on the State Bar’s website if you google “california state bar + video + LAP”

Lesson Objective: Are there other causes of action against negligent lawyers?

Lecture Suggestion: This is a good place to review some substantive law with your students: no

punitive damages for breach of contract case or straight up negligence. To go for punitive

damages, more is required.

Challenge Assignment: (pg. 207) If you have students who are looking to go deeper, there are

some questions they can research here. Of course, the answers are state-specific.

Check Your Understanding: (pg. 208)

2. Competence is legal knowledge, skill, thoroughness and preparation, reasonably

necessary for the representation.

4. Lawyer Assistance Program

5. mitigating factor: considerations or factors that may justify a reduction in the degree

of discipline imposed; not defenses that excuse misconduct

Lesson Objective: How is negligent disregard for the client different? (pg. 208)

Lecture Suggestion: There is a fine line here between the paralegal who is “covering for” the

boss, and the paralegal who is making the boss’s job easier by keeping the clients informed and

in touch. The lawyer has a duty of “direct and personal contact” but most cannot possibly be in

contact with the client as much as the client would like. Is supervising the paralegal who is in

direct and personal contact with the client enough?

Lesson Objective: Dangers of Negligent Supervision (pg. 209)

Lecture Suggestion: LPOs are new. This is a great place to have your students do some current

event research.

Challenge Assignment: (pg. 109) Inadvertent disclosure. FRE 402(b)

Lesson Objective: What does it mean to be a specialist? (pg. 210)

Lecture Suggestion: Discuss the problems of the new lawyer. How can you do your first case?

You’re not terribly competent to do anything fresh out of law school. It’s all about the

Lesson Objective: What negligence issues arise in unbundled services? (pg. 211)

Lecture Suggestion: For something short to read, send your students here:

http://oregonlawpracticemanagement.com/2011/03/14/the-ethics-of-unbundling/

Check Your Understanding: (pg. 211) 1. a 2. c. (Legal Process Outsourcing)

Lesson Objective: What are some defenses to a negligence claim? (pg. 212)

Lecture Suggestion: In re Watts, noted in this section, is a 1903 case. I give it to your students

so that you can tell this story: Watts represented a creditor of the Zier company. When Zier

appeared to be hiding its assets rather than paying creditors, Watts filed a case in state court and

Activity Suggestion: This is another good place for a research assignment!

Lesson Objective: What is the statute of limitations in negligence actions? (pg. 212)

Lecture Suggestion: Same here! Discovery plus two years? Discovery plus one?

Lesson Objective: Who can sue for professional negligence? (pg. 213)

Lecture Suggestion: Privity of contract may be a difficult concept for your students, especially

if they have not studied contract law prior to your ethics class. Go back to Blair v. Ing at the end

Lesson Objective: Is there a danger of Negligence Referral? (pg. 213)

Lecture Suggestion: Have your students find your local LRIS.

Lesson Objective: Who will be responsible for the lawyer’s negligence? (pg. 213)

This is corporations. If your students have already had that class, you’re good.

You need to tell this story to your students.

Plaintiff hired Lawyer 1 to represent it in a real estate purchase. Plaintiff gave seller some of the

purchase price but the transaction fell apart. When seller refused to return the deposit, Plaintiff

retained Lawyer 2 to recover that money from seller. Lawyer 2 sued seller for the money but did

not include a claim for legal malpractice against Lawyer 1. Plaintiff then hired Lawyer 3 (the

The appellate court allowed this last lawsuit and recovery against Lawyers 1 and 2 based on

indemnity claims because Lawyer 3 was responsible for not protecting Plaintiff from harm

caused by Lawyer 2 who was responsible for not protecting Plaintiff from harm caused by

Lawyer 1 who was responsible for not protecting Plaintiff from Seller. Sort of a domino thing

happening here.

The New Jersey Supreme Court disagreed, writing:

Whew! Cherry Hill Manor Associates v. Faugno, 182 N.J. 64 (2004)

The lesson here? Do not take clients who are suing everyone in their past.

And, this from Ohio: Once the lawyers have been absolved of malpractice, the case against the

law firm must also be dismissed. A law firm is an entity and does not, by itself, practice law.

National Union Fire Insurance Co. of Pittsburgh v. Wuerth et al., 122 Ohio St.3d 594 (2009)

Lesson Objective: How do these rules apply to the paralegal? (pg. 214)

Lecture Suggestion: Respondeat superior. But beware of the Tegman case at the end of the

chapter. In Tegman, non-lawyers who were acting as claim settlement advisors were held to the

standard of lawyers because they were claiming to do lawyer-like stuff for their clients. A

charge of UPL may get you a per se negligent decision.

Perhaps you saw the $1.26 billion default judgment issued against Pepsi (October 2009) blamed

on a legal secretary mistakenly putting aside a letter. You can google it. The judgment was set

aside in November 2009.

Check Your Understanding: (pg. 215) 1. c 2. d 3. b

Lesson Objective: What are some specific acts or omissions as negligence? (pg. 216)

Lecture Suggestion: I love this section because it starts with cases about starting a case and ends

with cases about ending a case. I wish I had the space to fill in all of the acts and omissions in

between.

Lesson Objective: What is professional liability insurance and can I get it? (pg. 217)

Lecture Suggestion: Students will ask you if they should have E&O insurance. This is what I

tell them: people sue deep pocket people. If you are young and don’t own anything, it is unlikely

Check Your Understanding: (pg 219) 1 non-engagement ; 2 premium; 3. errors and omissions;

4. bond

Answers to End of Chapter 7 Review Questions

Critical Thinking

1. Perry is committing UPL, we all know that, but he seems to be doing it competently.

2. OMG! This really happened to me! So, I ran across the hall and found a lawyer in

1. The Franko v. Mitchel case was really about the existence of an attorney/client

2. I put In re Mayne in the Extra Resources folder on line for you and your students. Mayne

1. suffer a severe psychological condition

3. progressing toward health through treatment

5. the misconduct is not likely to recur

The referee did not find that she had proved all 5 but used her years of no misconduct,

cooperation during the discipline process, her remorse and her commitment to restitution to

Assignments

1. I’ve been doing role play on this fact pattern for years. This would be a discussion I

would have in the final, final, final interview and I would say: I have (or don’t have)

E&O insurance. I’m wondering if I should let it go (or get some). What E&O firm does

this firm use?

2. StatuteofLimitations.com

3. The only state that mandates insurance, to my knowledge, is Oregon (since 1977). Many

states are going to the “mandatory disclosure” policy – if you don’t have malpractice

1. Competent legal representation requires the legal knowledge, skill, thoroughness and

2. Mental competence goes to the drug/alcohol abuse issues. Depression is also in this

3. Breach of contract, misrepresentation and fraud are typical. The federal Deceptive Trade

Practices act was used in the Latham case.

4. More training and preparation is necessary to become a specialist. Continuing education

in the area of specialization is also necessary. In some areas, a test is required.

5. Negligent disregard is ignoring the client and/or the client’s matter to the detriment of the

client. Paralegals can help by responding to client’s request for information (without

6. Each state has its own law on this question. Are you a comparative fault state? or a

contributory state? Good faith is a defense everywhere. Whether mental incompetence

(drugs/alcohol) is a defense to malpractice is also state-specific.

7. Statute of limitations is state-specific. In negligence, it is probably 1 or 2 years from the

8. People in privity of contract are typically the only ones who can sue for negligence.

9. Negligent referral is not a popular claim.

10. Professional liability insurance (Errors and Omissions insurance) insures the insured in

cases where the insured may have committed malpractice (negligence). This insurance

Notes about the Cases for Consideration

Case #1: Latham v. Castillo

1. This case represents a new approach to simple negligence: Consumer Protection. We’re

in Texas on this case where the parents of children who died has the misfortune of hiring

two incompetent lawyers in a row. The first settled a $6 million default judgment against

a hospital for $70,000. The second lawyer (Latham) got a good settlement on the

2. Their fraudulent misrepresentation claim failed because the damages for that claim are

3. Their breach of contract claim failed because they offered no evidence of what they

expected to gain from the negligence claim against the hospital. This sounds like bad

lawyering to me. Did the Castillos hire THREE bad lawyers in a row?

4. Latham needed a better calendaring system, like one that gave him an electric shock for

Case #2: Tegman v. Accident & Medical Investigations, Inc.

1. This is a case about a man (McClellan) who was running a business (AMI) that looked

like a law firm. AMI was in the business of settling claims for accident victims.

McClellan hired lawyers but he must have had a high turnover because it appears that the

lawyers he hired figured out that working for this company violated a bunch of ethical

without the clients’ knowledge and took all of the money by forging client signatures on

the checks.

Tegman sued McClellan, AMI, Mullen and two lawyers employed by AMI. McClellan

goes to the Big House on mail fraud charges. A trial court found Mullen and the two

lawyers liable for negligence.

Here is where we have the court saying: Nonattorneys who attempt to practice law will

The evidence showed that Mullen “negotiated settlements” for clients, sent a letter

rejecting a settlement offer made on the Tegman case without consulting Tegman.

Letters Mullen wrote identified her as a paralegal while she had a supervising lawyer and

do not have that identification after her supervising lawyer quit.

Mullen also argues that because she was not an attorney, she could not have had an

“attorney client relationship” with Tegman.

The word “verities” shows up in the middle of page 229. It means “truths.”

2. The court links her to McClellan’s bad acts by virtue of her failure to warn the clients that

In the News

1. The article tells us that the public is benefited because specialization provides the

consumer with the assurance that these attorneys have met rigorous standards concerning

both knowledge and practice.

2. In depth and up to date knowledge of both the theory and practice in these areas is

required for specialization.