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Failure to Supervise

Regardless of the corporate form it takes, a law firm is responsible for the actions of an employee or owner, as long as those actions occur in the ordinary course of business. Hyatt Regency v. Winston & Strawn, 907 P.2d 506, 184 Ariz. 120, 129-31 (App. 1995). This is true even if the employee had no managerial responsibilities and even if the law firm was not aware of what was going on. Id.

This general common law rule has been codified in statutory law as it applies to partnerships: “A partnership is liable for loss or injury caused to a person, or for a penalty incurred, as a result of a wrongful act or omission, or other actionable conduct, of a partner acting in the ordinary course of business of the partnership or with authority of the partnership.” A.R.S. § 29-1025(a).

However, if a law firm is organized as a professional corporation, an owner is not personally liable for the actions of another lawyer or firm employee, even if the firm itself is liable: “(g)enerally, individual officers, directors, shareholders, agents, and employees are not liable for torts of a corporation unless they were directly involved in the tortious act or the corporation is an alter ego.” Standage v. Jaburg & Wilk, P.C., 866 P.2d 889, 177 Ariz. 221, 229 (App. 1993).

The same is true if the law firm is a limited liability partnership (see, A.R.S. § 29-1026(c)) or a professional limited liability corporation. A.R.S. § 29-651. However, if the law firm is a regular partnership, a partner is personally liable for the partnership liabilities incurred after he joined the partnership. A.R.S. § 29-1026(a) and (b).

If an attorney died prior to a malpractice suit being brought, the malpractice claim traditionally could not survive. However, under A.R.S. § 14-3110, the personal representative of the attorney’s estate may be sued for the attorney’s malpractice: “Every cause of action, except a cause of action for damages for breach of promise to marry, seduction, libel, slander, separate maintenance, alimony, loss of consortium or invasion of the right of privacy, shall survive the death of the person entitled thereto or liable therefor, and may be asserted by or against the personal representative of such person, provided that upon the death of the person injured, damages for pain and suffering of such injured person shall not be allowed.”

Arizona law firms may list a lawyer who is not a member of the firm as “of counsel” if:

  • a) there is an ongoing and regular relationship where both sides are available to each other and each other’s clients for consultation;
  • both sides honor the confidentiality and conflict of interest requirements as if they were in the same firm;
  • “of counsel” lawyers who are not admitted in Arizona clearly disclose this;

and

  • any other material limits on the “of counsel” lawyer’s relationship with the firm are disclosed. See, Arizona Ethics Opinions 87-24, 00-08 and 12-01. Whether a firm may be held liable for the actions of an “of counsel” attorney has not been litigated under Arizona law.