Accountant Defense and Professional Liability Litigation

Troutman Sanders’ professional liability attorneys have significant experience representing accounting firms, individual accounting professionals, law firms, attorneys, and other professionals in litigation, regulatory investigations, disciplinary proceedings, and malpractice actions brought by former clients and third parties (such as creditors, investors, receivers, or trustees.)

Accountant Defense

Attorneys from our U.S. and international offices work together to provide efficient and integrated client services, and have assisted clients in effectively resolving litigation claims and regulatory inquiries and investigations reaching across a variety of issues that have affected accounting professionals over the past decade -- from stock option dating practices to the audits of foreign based companies facing scrutiny following the wave of reverse merger transactions.

Our experience and past representations provide a deep understanding of the accounting profession, the issues faced by accounting professionals, and the ever-changing regulatory landscape. In each of our representative matters, we start with our working knowledge of Generally Accepted Accounting Principles (GAAP) and Generally Accepted Auditing Standards (GAAS), and our familiarity with how audit teams plan, conduct and document their audit work, as well as the responsibility of and interaction between the company’s management and the members of the audit team. We also have expertise in the relationships between accounting firms and regulators, including the SEC, the Public Company Accounting Oversight Board (PCAOB), state accounting boards and other sources of professional and ethical standards.

We have defended accounting firms in disputes involving a wide variety of accounting issues, including allegations concerning accounting for stock options, revenue recognition policies and practices, the estimation of loss reserves and the presentation of financial statements across domestic and foreign reporting agencies. We also have defended the accounting and auditing work of our clients across numerous industries, including audits of industrial and technology companies, banks, insurance companies, sub-prime lenders, technology and telecommunications companies and transportation companies. Our attorneys have successfully represented numerous accounting firms as they responded to civil claims and regulatory investigations arising from audits of the Bernard Madoff-related funds. As needed and appropriate on individual matters, we draw upon the significant industry experience of our attorneys across numerous practice areas to provide efficient legal services to our clients.

In the course of our representation, we defend the quality of the work performed by our clients, and we aggressively pursue the defenses that may be available to such claims, including privity, causation, reliance, contributory fault, damages, applicable statutes of limitations, and contractual limitations on liability. By utilizing our early assessment and comprehensive approach to claims, we have successfully represented clients in cases asserted by their former clients, bankruptcy trustees, shareholders, creditors, investors, and insurers.

Our securities litigation attorneys regularly defend clients against allegations of violations of the federal securities laws and understand the unique issues that accountants and auditors face when responding to such claims. We have extensive experience representing accountants with respect to claims brought under Section 11 of the Securities Act of 1933 and Sections 10(b) and 18 of the Securities Exchange Act of 1934. We often have prevailed on such claims on dispositive motions. We also have extensive experience in matters subject to the Private Securities Litigation Reform Act of 1995 and the Securities Litigation Uniform Standards Act of 1998.

Our government investigations attorneys have represented accounting firms and individual accounting professionals in inquiries and investigations by the PCAOB, the SEC and various state accountancy boards. We have successfully presented our clients’ responses and positions through the Wells process and have defended clients in formal proceedings brought under Rule 102(e). We also have experience with regulatory matters that proceed concurrently with investigations by the Department of Justice or other federal agencies, and throughout the process we pursue strategies to avoid a potential enforcement action.

Our attorneys closely monitor current developments affecting the representation of accounting firms and publish on those topics, including most recently, “Accountants' Liability Under the Federal Securities Laws,” in the Matthew Bender treatise Federal Securities Exchange Act of 1934 , which addresses evolving theories of liability asserted against accountants and the latest pronouncements and enforcement efforts of the PCAOB.

Legal Professional Liability Litigation and Malpractice Defense

In addition to successfully defending legal professional clients in all types of litigation, we assist law firms and attorneys in the pre-litigation evaluation of potential claims and in minimizing exposure. We also provide advice and representation to law firms and attorneys on various issues that arise in the practice of law, including analysis of the rules of professional conduct, licensing and discipline issues, abusive litigation claims, motions for sanctions, and fee disputes.

Our most experienced attorneys have represented law firms and attorneys for decades and are among the most well-known practitioners in this field in their respective states. The 2014 edition of U.S. News - Best attorneys ranked the firm as Tier 1 in the Atlanta and Raleigh Metro areas for Legal Malpractice Defense.

As dedicated practitioners and thought-leaders in this area, we have given presentations to numerous organizations, including the American Bar Association, state and local bar associations, and Attorneys' Liability Assurance Society (ALAS), on various topics, such as legal malpractice litigation, legal ethics, claims avoidance and risk management.

  • Lead counsel in numerous successful representations of accounting firms in cases alleging professional negligence, common law fraud, securities fraud and breach of contract brought by former clients, creditors and state and federal regulatory agencies.
  • Counsel to professionals involving professional liability (legal and accounting matters). These claims have involved alleged malpractice in underlying areas as diverse as the alleged failure to comply with GAAP in connection with the audit of a carpet manufacturer to the alleged failure to properly close front-end and back-end tax-free exchanges and alleged RICO violations.
  • Represented a major accounting firm in civil actions and regulatory investigations relating to the audits of foreign based companies engaging in reverse merger transactions in the U.S.
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