But then Eli has a vision, which inspires him to direct his clients' wrath at another juicy target–the dismissed CEO, who is sued under a novel legal concept, “executive malpractice.”

“People sue their doctors when they botch a procedure. They sue their lawyers when they botch a case. Why shouldn't they also be able to sue their bosses when they screw up?” argues Eli's partner on the case. “CEOs owe a fiduciary duty to their stockholders. Why shouldn't they owe the same to their employees?”

The judge certifies the class and allows the case to proceed. Then the fun begins.

“What went wrong?” the defense attorney asks the CEO, squirming on the witness stand.

“We made some bad bets,” he shrugged. “We expanded into markets maybe we should've stayed out of. We made investments in R&D that didn't pay off.”

He goes on to argue that he should not have been dismissed in the first place. He stands by his decisions, and insists many would pay off in the long run. But with the quarterly earnings pressure public companies face, he claims he was dismissed as a scapegoat to stave off a shareholder revolt.

Should CEOs be held to the same standards as doctors, he's asked.

“Doctors operate in a sterile, fairly predictable environment,” the CEO says. “But running a diversified, multinational conglomerate is like waking up every morning drinking from a fire hose.”

The case took a bizarre twist when the company rehires the CEO right in the middle of the trial, pulling the rug out from under the defense–which based its argument on the fact that the CEO was incompetent, and therefore liable for poor decisions that cost the 300-plus plaintiffs their jobs.

But by bringing the CEO back on board, the company is seemingly conceding THEY were wrong to blame the CEO, and trust him to take the helm once more. (I can't imagine this ever happening, but this is a TV show, after all.)

Still, the judge permits the plaintiffs their day in court, agreeing with Eli that regardless of whether the CEO is still in place or fired, the question of executive malpractice remains to be settled.

The closing arguments were fascinating.

The defense attorney concedes to the jury that her client is in a tough spot because “Main Street is furious with Wall Street. Millions are losing their jobs while the CEO responsible collects millions in bonsues and golden parachutes. So why shouldn't CEOs be held to the same professional liability standard as doctors?”

Well, she says, “have you been to the doctor lately? Are you aware of the needless tests to shield them from malpractice lawsuits? Do you really want corporate executives to be held to the same second-guessing in courtrooms? Do you know what that would do to America's ability to compete in the global market?”

She went on to argue that “if you take away the golden parachute, how will you attract qualified executives to run the companies who give us our jobs?” Her conclusion was ominous: “To give [Eli Stone] what he's asking for could cost you your job.”

Not exactly a legal defense, is it? More like a warning, or a threat!

Eli's team made a far more eloquent closing to counter the defense attorney's “familiar argument, which is that CEOs have to make billions because without them, there are no jobs for the rest of us. Greed is good. A rising tide lifts all boats. Prosperity trickles down. Don't tie our hands with regulations. Well, we see how that worked out.”

Eli's team argued that “plaintiffs didn't 'lose' their jobs. An incompetent CEO lost their jobs for them. He ran their company into the ground while falling softly to Earth in a golden parachute.”

Mr. Stone's associate told the jury that “the vast majority of us depend on CEOs for our livelihoods, so why shouldn't the law hold them to the same standard of care as doctors and lawyers and stockbrokers, accountants and attorneys? Why shouldn't CEOs be held to the same basic standard of competence that you're held to in your jobs?”

This whole concept of executive malpractice is fascinating. Is this fictional case preposterous, or might Eli be on to something? With millions being laid off–sometimes due to horrible decisions on credit default swaps, subprime mortgages and other risky financial bets–and with job prospects grim for this year and perhaps even in 2010, such legal questions might be more than academic before long.

What might the exposure implications be for risk managers and their directors and officers insurers? Might there be an opportunity for carriers to create an entirely new class of professional liability coverage? Or is this just a cockamamie delusion from a hack Hollywood scriptwriter?

Might you be wondering how the jury decided this case? Well, they came down in favor of the plaintiffs. While only granting an inconsequential economic judgment, they tacked on $220 million in punitive damages–in essence ordering the disgraced CEO to turn over his annual pay to those who lost their jobs because of his alleged incompetence.

It certainly felt cathartic, but would it stand on appeal? Does the entire concept of executive malpractice have a leg to stand on?

What do you folks think?