Accounting Malpractice Defense
Navigant assists accounting firms and their legal counsel in a variety of litigation matters. These lawsuits are brought by audited companies, trustees of failed audited companies and/or their creditors committees, securities holders, insurance companies, and the SEC. We provide assistance in all aspects of a claim, including liability, causation and damages.
Liability
We have consultants with significant big-firm accounting experience and credentials, which gives us the know-how and credibility to provide expert testimony or consulting advisement on liability matters. We assist counsel in analyzing compliance with GAAP, GAAS and standard-of-care issues. We also assist in fraud investigations, funds flow analysis and reconstructing financial statements.
Causation
Because of our analytical, investigative and fact-finding prowess, we are uniquely situated to evaluate and opine on critically important causation issues in accounting malpractice cases. We have found that many plaintiffs in accounting malpractice matters spend most of their effort and resources attempting to prove their liability case while tending to ignore their causation case and therefore relying on broad causation assumptions. Based on our substantial knowledge and experience in analyzing causation assumptions in accounting malpractice suits, we have proved to be a valuable asset on the litigation team.
Our causation analyses often involve analyzing the financial condition of the audited company over time; determining the causes of its failure; identifying other contributing factors and parties causing the loss; explaining the business model and inherent risks; analyzing the company’s operations; analyzing economic and market conditions; investigating company and board responses to past negative events; and addressing “but for” causation versus “loss” causation issues.
Damages
Damages claims can consist of increased costs, lost profits, deepening insolvency, diminution of value and other forms. In analyzing damages we address the method utilized by the opposing expert as well as the quantification to identify inconsistencies with accepted practice and theoretical flaws. We have found that many accounting malpractice damage claims tend to include unavoidable losses while excluding avoidable benefits (e.g., proceeds from sale of stock after the “should have been” bankruptcy date). We also have significant experience addressing and rebutting deepening insolvency damages.
