Accountants Liability

Reach and Depth

Decades of experience and a trove of institutional knowledge characterize our team and have played important roles in our successful defense of a wide variety of accounting practices – national firms, regional firms, small firms, even solo practitioners. We have successfully handled many different types of malpractice claims in venues ranging from federal and state…

Decades of experience and a trove of institutional knowledge characterize our team and have played important roles in our successful defense of a wide variety of accounting practices – national firms, regional firms, small firms, even solo practitioners. We have successfully handled many different types of malpractice claims in venues ranging from federal and state courts to alternative dispute resolution forums.

Our attorneys who focus on accountant malpractice defense have strong financial and economic backgrounds and are fluent in the language of accountancy. They are adept at reading and understanding accounting and auditing documents and financial statements of all types. In the rapidly–changing regulatory environment in which accountants ply their trade these days, our attorneys stay on top of the latest developments and are keenly attuned to the potential impacts of tax-code changes on the practice of accounting.

As with all engagements undertaken by Freeman Mathis & Gary LLP, we begin accountant malpractice actions with a concentrated effort to identify and understand the needs of our clients and to analyze the details and nuances of their particular matter… We have access to a tremendous in-house reservoir of legal talent and broad-based knowledge in the form of our deep bench of attorneys, and we tap into it to whatever extent is needed.

When appropriate, we also leverage outside resources to gain an intimate knowledge of a plaintiff’s particular business and/or to provide us with a better understanding of the type of claim being brought against our client. We stress efficiency and thoroughness in pre-trial preparation, always keeping our clients’ best interests first and foremost. We are proactive in anticipating plaintiffs’ actions and strategies, positioning ourselves to swiftly deflate and refute plaintiffs’ claims.

Our attorneys who focus on accountant malpractice defense have broad experience with accounting and auditing issues, including detection of employee defalcations (unauthorized takings), going concern disclosures, revenue recognition, inventory valuations, accounting for tax liabilities, valuations, internal controls, balance sheet presentations, and will and trust issues. We have served as counsel to accounting firms in securities class action suits and in suits by purchasers and sellers of businesses, banks, and other lending institutions.

FMG’s clients regularly prevail in such actions both on dispositive motions and at trial because we defend the quality of our client’s work and pursue key defenses including limits of liability, causation privity, reliance, contributory fault, deepening insolvency, and the applicable statute of limitations. We represent accountants before professional boards concerning licensing, client disputes, and ethical issues. We also represent accounting firms in connection with grand jury investigations.

As accountants expand the range of services they provide, their exposure also increases. We help them meet this challenge by offering risk-management services, such as contract and engagement letter review, as well as drafting and guidance on formulating document-retention policies. We also provide a wide range of consulting services; we provide advice on business aspects of a firm’s operations, contracts, employment, and personnel issues; assisting with file transfers, electronic documentation, and expansion of the scope of services.

We work with accountants on IRS-related matters, for example, providing assistance in responding to document requests, representing them at depositions, and providing advice on pre-claim matters. We also help accountants deal with legal issues that arise under regulations promulgated by the American Institute of Certified Public Accountants, The Public Company Accounting Oversight Board, The I.R.S., the S.E.C., and other State, Federal and regulatory bodies.

Representative engagements:

  • Defense of action brought by mutual funds alleging fraud and misrepresentation in connection with the securities offering statement on an $80 million bond issue.
  • Successfully defended a CPA firm against a claim of negligent misrepresentation in the preparation of financial documents, with the decision affirmed in the First Circuit Court of Appeals
  • Successfully defended CPA firms in malpractice actions alleging failure to detect employee defalcation
  • Successfully defended a CPA firm in a trial alleging fraud and misrepresentation in valuing accounting receivables pledged to a lender
  • Successfully defended a CPA firm in a malpractice action involving a consulting engagement concerning the establishment of a deferred compensation plan
  • Successfully defended a CPA firm in a malpractice action alleging failure to advise a client that an offshore deferred compensation plan was an illegal tax scheme.
  • Successfully defended firms in malpractice actions alleging negligent preparation of tax returns
  • Successfully defended CPA firms in malpractice actions alleging negligent preparation of financial statements
  • Successfully defended a CPA firm in connection with an action alleging malpractice in setting up a financial plan and trust

Our Attorneys and their experience often make FMG the law firm of choice for accountants or their insurers when a firm faces significant claims. Also, FMG can handle these and other matters through coordinated teams that combine attorneys who understand the interests and needs of accounting professionals with lawyers whose practices focus on a broad range of legal issues, including bankruptcy, commercial transactions, employment, and securities and tax law or litigation.

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