On April 25, 2006, the Supreme Court of Georgia issued Formal Advisory Opinion 05-2 in which it concluded that a company may enter into an agreement with an in-house lawyer to hold that lawyer harmless for malpractice committed in the course of employment.
Normally, a lawyer cannot make an agreement with a client that limits the lawyer’s liability to that client for malpractice but the Court felt that companies are sufficiently sophisticated so that there is no problem of overreaching and also that the lawyer “does not avoid the negative consequences of malpractice because he or she is subject to being discharged by the employer.” The ruling points out that “the proposed ‘hold harmless’ agreement does not limit liability to third parties affected by in-house counsel representation. Instead, the agreement shifts the responsibility for employee conduct from an insurance carrier to the organization as a self insurer.” (See my posts of Dec. 20, 2005, about malpractice charges against in-house lawyers; and Oct. 24, 2005 for additional comments.).