Managing Professional Liability Litigation Against Accounting Firms (Part 3)

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This is Part 3 of a three-part series discussing the basic components of a professional liability lawsuit brought against an accounting firm and its partners and factors a firm’s managing partner should consider before and during this type of litigation for utilizing applicable insurance coverage, maximizing effectiveness of defense and, where possible, bringing the controversy to conclusion by settlement. Part 1 covered the current litigation environment for accounting firms, relevant provisions in engagement letters, responding to subpoenas, professional liability insurance, and the risk of instigating a professional liability counterclaim in a fee collection action. Part 2 focused on differences between litigation in state and federal courts, and in private arbitration, initial assessment of a professional liability claim, development of defense strategy, and the stages of litigation from the initial pleadings through discovery. Part 3 discusses the latter stages of litigation from summary judgment proceedings through trial and will conclude with the mechanics of and strategies for settlement negotiation.

Bringing the lawsuit to a conclusion -

Having completed most or all of pretrial discovery, with input from the accounting firm’s managing partner and the professional liability insurer’s claim attorney, the lead defense attorney must make a critical strategic decision toward bringing the litigation to conclusion. At this point in the case, based on the strength of evidence, fact and expert witness testimony, and law supporting the accounting firm’s defense, a determination must be made by defense counsel, the firm, and its insurer whether to seek full or partial summary judgment and/or pursue settlement efforts in earnest toward avoiding the risk of or positioning for resolution through a bench or jury trial. The following final segment of this article will aid the firm’s managing partner in understanding the components, decisions, and strategies involved in the latter and final stages of a malpractice lawsuit.

Originally Published in CPA Practice Management Forum - November 2013.

Please see full Article below for more information.

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Topics:  Accounting, Professional Liability

Published In: Civil Procedure Updates, General Business Updates, Finance & Banking Updates, Professional Malpractice Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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