The Accountant/Attorney Liability Reporter: March 2006

SEC Enforcement Action Triggers Director’s Duty to Repay Corporate Indemnification

A company director found in violation of securities laws for using material, non-public information to trade company shares for personal gain was found to owe repayment of more than $800,000 in legal fees advanced pursuant to an indemnification agreement because of a finding against the director in an SEC civil enforcement action.

Continuing Representation Doctrine Does Not Defeat Statute of Limitations Defense

In a legal malpractice case arising out of representation of a plaintiff in divorce proceedings, the Appeals Court of Massachusetts found that the plaintiff could not avoid the statute of limitations for legal malpractice due to the continuing representation doctrine because the plaintiff had actual knowledge that he suffered appreciable harm as a result of the lawyer’s conduct.

Massachusetts Supreme Judicial Court Rejects “Actual Malice” Test for Assessing First Amendment Protection Afforded Lawyers’ Courtroom Statements

The Supreme Judicial Court of Massachusetts (“SJC”) recently affirmed a judgment disbarring a Massachusetts attorney in a significant decision rejecting numerous challenges to the disbarment, including an argument that statements critical of the court were protected by the First Amendment to the U.S. Constitution. See In the Matter of Matthew Cobb, 445 Mass. 452 (Dec. 8, 2005) (Spina, J.).

Constructive Trust Imposed on Real Estate Purchased by Attorney Acting in Breach of Fiduciary Duty

As a result of what the court described as an attorney’s wrongful actions in breach of his fiduciary duties toward his clients, the Massachusetts Appeals Court in Duggan v. Gonsalves, 65 Mass.App.Ct. 250 (2005), vacated a Housing Court’s order for eviction and ordered further proceeding for purposes of formulating a constructive trust in favor of the clients who were occupying the home after it had been sold to the attorney.

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