Md. Senate considers more liability protection Goal is to cover corporate officers

February 25, 1992|By David Conn | David Conn,Annapolis Bureau

ANNAPOLIS -- The Senate takes up a bill this week to provide more liability protection for members of "professional service corporations" -- attorneys, physicians, architects, engineers and certified public accountants, among others.

The bill, which the House of Delegates passed unanimously Friday, would make explicit what some lawyers say already is implicit in the law: that members of professional corporations can't be held liable if they had no reason to know about the reckless behavior of others in the firm.

For example, if the proposed law had been in effect in 1985 and a Baltimore law firm set up as a professional service corporation had been sued that year for its involvement in the savings and loan crisis, the personal assets of lawyers in the firm who weren't involved in the case would have been protected.

Members of firms that are set up as partnerships, by contrast, must share in the liability of all other partners.

Lt. Gov. Melvin A. Steinberg, who helped draft the original professional service corporation law in 1969 and the revision that now probably will move to the Senate Judicial Proceedings Committee, said the change is needed because of the growth in the size of such corporations in recent years.

"A partner in a major firm, be it lawyer, doctor, accountant, is not responsible for the acts of others in that firm if he had no knowledge or connection to that individual," Mr. Steinberg said.

Some lawyers said passage of the bill would not lead legions of lawyers and doctors to set up professional service corporations. Even though the courts have never directly addressed the issue, most professionals thought such liability protection existed already, they said.

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