Lawyers as Employers

Risk management

Lawyers as Employers

Employees can be critical to the functioning of a law firm. Whether lawyers have one employee or one hundred, significant potential liability arises from a lawyer or law firm’s status as employer. 

Risk 1: Liability to the Employee

Lawyers who engage employees take on obligations to those employees. Employment relationships in BC are governed by a number of pieces of legislation, including the Employment Standards Act and Human Rights Code, as well as contractual and common law duties. Termination of employment is a common point for legal claims to be made by employees. One such claim is “wrongful dismissal,” which is the failure to provide reasonable notice of termination. These claims can attract significant damage awards, up to 24 months of salary, and more in some cases.

Written employment contracts are a simple and effective way to cap this liability. Employers can include language limiting the amount payable upon termination to as little as the minimums required by the Employment Standards Act. Termination clauses are the subject of frequent challenge in court (for example, the recent decision of the Ontario Court of Appeal in Wood v. Fred Deeley Imports Ltd.), so it is important to seek advice from an employment lawyer on contract language and implementation.

Risk 2: Liability to other Employees

Lawyers who engage employees can also expose themselves to liability for claims by their other employees. A classic example is a claim by an employee who feels they have been bullied or harassed by another employee. Employers have a legal obligation to maintain a workplace free from harassment. Employees can bring workplace harassment complaints against employers in multiple fora, including in civil actions for constructive dismissal, before the BC Human Rights Tribunal or through a WorkSafe BC complaint. Even if the employer had no knowledge or involvement in a situation between two employees, they can still be named and found liable.

This liability is best managed through training, supervision and workplace policies. Employers are required to have a bullying and harassment policy, including a mechanism for complaints and investigations. Many employers are reluctant to get involved in disputes between employees, but this can be an effective way to manage the risk of a lawsuit or complaint to an administrative tribunal. Training and supervision are also important so that employees are aware of the expectations for conduct at work, and that conduct is being monitored, and issues addressed early.

Risk 3: Liability to Clients

Lawyers who engage employees are also open to claims by their clients for the work of those employees. Lawyers are responsible for the work of their employees, both through the vicarious liability present in all employment relationships and through their professional obligations. The Code of Professional Conduct for BC, Chapter 6.1-1 dictates that “a lawyer has complete responsibility for all business entrusted to him or her and must directly supervise staff and assistants to whom the lawyer delegates particular tasks and functions.”

This liability can be addressed through insurance. Lawyers in BC have compulsory professional liability insurance through the Lawyers Insurance Fund (“LIF”), but should also consider excess liability insurance coverage. This risk can also be managed by training, education, supervision and policies. There is a helpful article published by LIF entitled “The buck stops here!”, which outlines 10 tips to minimize risk when delegating work. Key suggestions include educating employees about the professional obligations of lawyers (for example, confidentiality) and maintaining an open-door policy to encourage employees to bring errors to the lawyer’s attention early.

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