Stakeholders of law firms are often taken aback when they learn they are responsible both ethically and civilly for those individuals working in or for their firm, including their fellow stakeholders. A complete analysis of how and why is beyond the scope of this article. Suffice it to say, you may not be as safe as you think you are.
We often hear attorneys say, “the laws of our jurisdiction limit the liability of stakeholders or partners thereby insulating us from personal liability for the negligence of the other attorneys in the firm.” This generalization may be technically correct, but more times than not, it creates a false sense of security among firm owners which leads to complacency or inattention to the very important duty of knowing what is going on and who is doing what within the firm. Failing to be aware of what goes on in your office is a recipe for disaster.0 Attorneys have been found civilly liable for the sins of others, and attorneys have been disciplined for it as well.
Limited liability for the acts or omissions of your partner or fellow shareholder is not the same as no liability. While protecting you from direct liability for the acts of another, these statutes usually do not preclude an independent claim of negligence – for instance, the failure to supervise another attorney or employee of the firm. The difference may be only as to form since the damages claimed against you for failure to supervise may well be the same as those claimed against the attorney who committed the act or omission. If you practice in a jurisdiction that has adopted the American Bar Association Model Rules of Professional Conduct (MRPC) or an adaptation of those rules, you have an ethical duty as a stakeholder to supervise what happens in your law firm. Please review Rule 5.1, Responsibilities of Partners, Managers, and Supervisory Lawyers and Rule 5.3, Responsibilities Regarding Nonlawyer Assistants if you are unfamiliar with the requirements. If your jurisdiction allows use of the MRPC as evidence establishing the standard of care in a legal malpractice claim, which many jurisdictions do, then you may face civil liability for an act or omission committed by another attorney in the law firm, including another stakeholder or partner.
If your firm operates through a managing partner or stakeholder, a managing committee, or some other type of management group, the attorney(s) exercising managerial authority can be held personally responsible for the failures of others to comply with the MRPC. Rule 5.1 states in pertinent part that “[a] partner in a law firm, and a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm, shall make reasonable efforts . . .” to make sure that all attorneys comply with the MRPC. The Rule also states “[c] A lawyer shall be responsible for another lawyer’s violation of the Rules of Professional Conduct if: . . . (2) the lawyer is a partner . . . or has direct supervisory authority over the other lawyer . . . ” Attorneys across the country are being called into court to answer for the sins of others because of their supervisory role in the law firm or on a particular case. Obviously, the merits of any such claim depend upon the facts at issue. While civil liability should be a concern to every licensed attorney, a greater concern should be the ethical ramifications that a failure to supervise can have on your license to practice law. Attorneys have been suspended for their failure to supervise.
Be aware of what is going on in your firm. If you are not, you may well have to answer why.