Management and Organizational Studies 2275A/B Study Guide - Limited Liability Partnership, Misrepresentation, Liability Insurance

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PART 6: EMPLOYMENT AND PROFESSIONAL RELATIONSHIPS
CHAPTER 22
PROFESSIONAL SERVICES
Objectives
After studying this chapter, you should have an understanding of:
how business uses the services of professionals
the legal responsibilities of professionals to their clients and others who rely on their
work
the role of professional bodies
Learning Outcomes
Understand the contractual, fiduciary, and tort responsibilities of professionals to their
clients (pages 561)
Recognize how professionals manage legal risks (pages 570)
Understand how a self-regulating profession governs and disciplines itself
(pages 572 – 574)
Chapter Summary
Professionals owe a range of duties to their clients. Professionals are governed by contract
and tort law. They must deliver services as contracted for and in accordance with the
requisite professional expertise. If they are negligent in performing their responsibilities,
they will likely be responsible for damages. In addition, professionals may be in a fiduciary
relationship with their clients if the elements of trust and confidence and the reliance on skill,
knowledge, and advice are present. Because of inherent vulnerability or dependency, the
client is owed this duty of loyalty and trust. Professionals also owe duties to those who are
not clients but who rely on their work and advice. Whether a duty is owed in a particular
situation depends on foreseeability and the need to impose reasonable limits on potential
liability. Professional service providers manage risk for the same reasons as businesses in
general, but without the same freedom of choice. Insurance is critical, and many professions
make such coverage obligatory. Professionals can consider organizing their practices as
limited liability partnerships or corporations, although other trends have greater immediate
impact for clients. In particular, new forms of practice, such as national and international
firms, offer benefits for users. The professions are governed by legislation that establishes
them as self-regulating entities. The professions create codes of conduct or rules of practice.
These determine the standards that their members must meet, as well as providing a measure
of the expected standard of care in contracts, torts and fiduciary obligations. Most
professions have created dispute resolution services or complaint procedures to assist clients.
They are also maintain a discipline process that provides assurance to users that professionals
violating professional rules will be disciplined, up to and including removal from
membership. The challenge facing clients and professionals is to ensure that the individual
Copyright © 2011 by Nelson Education Ltd.
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PART 6: EMPLOYMENT AND PROFESSIONAL RELATIONSHIPS
professionals continue to comply with the ethical obligations of the profession, despite
increasing pressures, both from their own members and from clients, to become more
business minded.
Study Outline
Use this outline to prepare a complete set of notes for this chapter.
Business and Professional Services – page 561
Relationships and obligations_______________________________________________
_______________________________________________________________________
Ethical obligations________________________________________________________
_______________________________________________________________________
Hiring professionals in-house_______________________________________________
_______________________________________________________________________
Responsibilities of Professionals – page 563
_______________________________________________________________________
_______________________________________________________________________
Responsibilities in contract_________________________________________________
_______________________________________________________________________
Professional service contracts_______________________________________________
Fiduciary responsibilities___________________________________________________
_______________________________________________________________________
Independent legal advice___________________________________________________
_______________________________________________________________________
Responsibilities in tort ____________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Responsibility to third parties_______________________________________________
_______________________________________________________________________
_______________________________________________________________________
Professionals’ Risk Management Practices – page 570
Incorporation or limited liability partnerships___________________________________
_______________________________________________________________________
Insurance ___________________________________________________________
Governance Structures of Professions – page 572
_______________________________________________________________________
_______________________________________________________________________
Legislation ___________________________________________________________
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CHAPTER 22: PROFESSIONAL SERVICES
_______________________________________________________________________
Self-regulating professions______________________________________________
Right to practice__________________________________________________________
_______________________________________________________________________
Multidisciplinary practice_______________________________________________
Disciplining professionals__________________________________________________
_______________________________________________________________________
The complaint process__________________________________________________
SELF-ASSESSMENT
Key Terms
Briefly define each term in the space provided.
Professional – page 562
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Retainer – page 563
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Duty of confidentiality – page 566
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Privilege – page 566
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Matching
Match the correct letter of each term in the space provided before each sentence.
A Professional fiduciary duties
B Confidentiality
C Fiduciary
D Insurance
E Limited liability partnerships
102
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