We have assisted many accounting firms in the creation or revision of their client engagement letters. They very often question the need to include certain provisions intended to limit their liability to their clients and sometimes ask whether the provision is even enforceable. Whether the provision will be enforced is uncertain due to the very limited case law addressing liability-limiting provisions in accountants’ client engagement letters, and there could be variations in enforcement from state to state. Nevertheless, we regularly advise our clients to include the provisions, even if enforcement is uncertain, because the provision might just be accepted and never challenged, thereby serving its purpose, even if a court strikes it down after a legal challenge. Continue Reading Deloitte’s $500 Million Sentence
Consider this scenario: A young couple entrusts you, an experienced real estate attorney, to assist them in the purchase of their first home. Days before closing, your unsecured email account gets hacked and your client receives an email, which to all appearances is from you, telling them to wire funds to a third-party account instead of bringing the cash to closing. You only find out about “your” email to your client after the transfer has been made and your clients’ savings, accumulated over many years, is gone. What exactly do you think you can say to your clients to make it better?
Continue Reading The Proof Is in the Password!
Design and other professionals often incorporate their practices in an effort to avoid individual liability. They also add well-crafted limitations of liability and indemnification clauses in their form services contracts to avoid responsibility for problems that arise in the execution of the plans. These strategies are especially important for practitioners in jurisdictions where a design professional may be exposed to liability disproportionate to the limited scope of services, such as where codefendants have no insurance coverage or are underinsured. It is also common for plaintiffs to sue the professional individually to attempt to circumvent favorable clauses in the professional corporation’s standard contract for services.