Individual Liability for Professional Malpractice? Yes, You May Be Liable for That.

Individual Liability for Professional Malpractice? Yes, You May Be Liable for That.

By: Collins Einhorn Farrell

A professional-malpractice lawsuit typically names not only the firm or corporation at which the professional is employed, but also the professional in an individual capacity. Since most professionals form or join corporations to avoid personal liability, they often question why they’re being named individually—especially when they acted within the scope of their employment and for the benefit of their employer—and they often request that the individual-capacity claim be dismissed. Such questions and requests, while understandable, are actually the product of a fundamental misunderstanding of the law.

Michigan law holds professionals personally liable for their own tortious conduct, even if they work under the umbrella of a corporation. Michigan codified this common-law principle for professionals in M.C.L. § 450.1285. Under this statute, professionals who provide services to clients are personally liable for their own conduct, regardless of whether they’re working on behalf of a firm or corporation. This statute actually goes one step further: professionals are personally liable not only for their own conduct, but also the conduct of subordinates under their supervision.

What This Means for Professionals

Professionals will be held personally liable for damages caused by their own negligent conduct, as well as their subordinates’ negligent conduct. Practicing a profession—whether law, accounting, or engineering—under a corporate form doesn’t shield professionals from personal liability for their negligent conduct. This, of course, is all the more reason for professionals to protect themselves by purchasing liability insurance. Professional-liability policies issued to corporations routinely include the corporation’s officers, partners, associates, and employees as “insureds” so there’s coverage in place for personal liability.

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