Five ways to get sued

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Christopher Piety outlines the top five ways accountants can make themselves vulnerable to litigation.

Mistake adherence to professional standards as a substitute for getting it right

Juries rarely care about your professional standards, rules, or disclaimers. What they care about is if you get it right. When you are preparing tax returns, or you are engaged in a review or compilation of financial statements, you are not required to verify certain types of information, but think twice. If something looks irregular, it probably is. Investigate it, document it, communicate it – and get it right.

Fail to communicate with clients in writing

Failing to document important information is a common mistake that often leads to lawsuits. If it is not in w...

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Advise both parties on a transaction

Good solid advice.

Many years ago, one of the partners of the firm I used to work for advised the two owners of a business where they had decided to go their separate ways and split the business between them.  The two owners went on their ways and at the time they were happy.

Then a year later, one of the owners decided he had paid too much so sued the other owner and our firm. And of course, our firm eventually had to pay out.  If owner A (the plaintiff) won, he would expect the firm to pay, or if owner B paid out, then B would sue us. If owner B landed up by A having to pay him, then A would expect us to pay. It was a no win situation for the firm and I realised then that it was always a high risk to advise both parties, and it is a practice I have always followed.

 

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Good advice.

Good article and good advice. When in practice I saw most of these coming and avoided them... with one exception, suing for fees! Clients you sue for fees will always try and claim you did something wrong even if its BS and will always make complaints to your professional body. You have been warned by someone ruined by this very counter strike!

Albert Camus

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