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

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OC51625

9 Feb 2013

School

Western University

Department

Management and Organizational Studies

Course

Management and Organizational Studies 2275A/B

Professor

Henry Meredith

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

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

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