Malpractice Suits: Handling Your Worst Nightmare

Handling Client Lawsuits

Roger Russell of Accounting Today develops a game plan for the CPA firm who is sued by a client (while academic lawsuits are not unheard of, the presence of alternate venues such as grade appeals boards makes them less common) for negligence or other reasons. To minimize the likelihood of the suit coming in the first place: make sure to always use engagement letters, document any controversial position and maintain a relationship with a compentent attorney. In the first phase, the keys are objectively assessing the situation or problem at the heart of the action and keeping your "cool" under pressure from the client. Next priorities: comply with terms of malpractice insurance, never directly admit fault (focus on the descriptive, not the normative and try if possible to get to an alternative dispute resolution (ADR: mediation, arbritration, etc.) approach. Finally, understand the legal process (my wife is the legal expert in our family so I won't go into details) which can be long and take key people away from work with other clients. Finally, if ADR is not an option, determine early in the process whether an out-of-court settlement is palatable, and if so, under what circumstances.

While I hope that you (and I) never have to use the author's advice, he does make good points--particularly in regard to keeping your cool (easier for some than for others) and attempting to keep the focus on facts. Additionally, try to let your lawyers handle the situation to the maximum possible, especially regarding contact with the plantiff--there are lots of things which a plantiff's attorney can legally do in a courtroom that can drive all but the most stoic amongst us to an emotional gaffe if not meltdown.