Auditor and Accountant Defense

Accounting firms and their auditors are under more scrutiny than ever before. New reporting laws, regulatory bodies and a national financial crisis have increased the already harsh exposure that accounting firms face. Navigating today’s litigious landscape requires straight talk, sound counsel and practical solutions, three tenets that Snell & Wilmer’s attorneys make a part of their daily practice.

Snell & Wilmer defends accounting firms and their auditors in securities actions, professional malpractice claims and government/regulatory investigations, as well as assists with subpoena responses. Our successful auditor and accountant defense experience includes numerous multi-million dollar audit, tax, valuation, ERISA and consulting malpractice cases in state and federal courts, as well as the defense of investigations and disciplinary actions before the SEC, the PCAOB and State Accountancy Boards.

From the Big Four to local CPA offices, Snell & Wilmer vigorously defends accounting firms and their auditors in areas such as:

• Professional malpractice claims (audit, tax and other accounting and consulting work)
• Securities fraud litigation
• Ponzi schemes and intra-company fraud
• Government/regulatory investigations
• Complying with and contesting subpoenas
• Accountant malpractice

Our accounting and securities attorneys foster collaboration and open communication with our clients’ accountants, internal legal staff, experts and other outside attorneys to defend our clients and exceed their goals, needs and expectations.

Commitment to Our Clients: At Snell & Wilmer, we differentiate ourselves by providing an unmatched commitment to client service. We do this by (a) working as one team with the accounting firm and its office of general counsel, (b) providing personalized legal services, including loss-prevention, practice management and other advice, (c) developing and training our professionals with a specialized “skill set” needed to provide the firm with the best informed representation available, (d) seeking to practice innovative and improved processes to achieve better outcomes and efficiencies, (e) providing geographic coverage from within our nine office locations and (f) customizing our services to better fit your firm to ensure a long-term cooperative and successful relationship.

Invested in the Profession: At Snell & Wilmer, we are committed to and actively involved in the tax and accountancy professions. Our attorneys regularly speak at national ALI-ABA and Federal Tax Institute conferences, as well as local CPA conferences, on accounting malpractice, risk management, loss prevention and other accountants’ liability issues. We also publish articles on these and other topics for various industry publications and insurance carriers, and one of our attorneys serves on the Law Review Committee of the Arizona State Board of Accountancy.

Snell and Wilmer attorneys handle matters for Big Four firms, other national and local firms, and serve as panel counsel for various insurance carriers that write exclusively for accountants. We offer our clients a comprehensive understanding of the auditing process, audit documentation issues, GAAS, GAAP and PCOAB rules. Our attorneys have defended auditors and accounting firms in civil suits and regulatory agency disciplinary actions, and have successfully tried cases to jury verdict and before arbitration panels. Below are just some of the auditing and accounting cases we have handled:

Auditor/Accountant Malpractice

• Defended a large accounting firm against a $50 million audit malpractice claim brought by a receiver for failed health insurance company
• Defended a large accounting firm in audit malpractice litigation brought by management of holding company
• Defended a large accounting firm against a $14.5 million (plus trebles and punitives) audit malpractice case in state court in Fort Worth, Texas
• Represented a large accounting firm in a substantial malpractice arbitration in which the plaintiff eventually chose to abandon its claim
• Defense of an audit malpractice claim where a large firm refused to give a clean opinion unless management reversed previously recognized income
• Defended and settled a tax malpractice lawsuit arising out of an IRS audit of a law firm
• Defended a large accounting firm in state court action arising out of the firm’s audits of MiniScribe

Private Securities Litigation

• Defended a large accounting firm against securities class action
• Defended a large auditing firm against securities class action
• Defended various lawsuits and regulatory matters with a $35-60 million exposure arising out of a firm’s audits of an insurance holding group that was a victim of massive management fraud
• Defended an auditor against a $35 million securities fraud claim brought by investors alleging a failure to detect a Ponzi scheme

SEC and PCAOB Enforcement

• Represented an audit partner for large firm in Rule 102(e) proceeding before the SEC, including administrative trial and subsequent appeal to full Commission
• Represented an audit partner for large accounting firm through an SEC investigation and Wells submission
• Served as counsel in a Rule 102(e) proceedings against audit partner and manager and in their lawsuit to enjoin the SEC from maintaining that proceeding
• Represented individual auditors and accounting firms in PCAOB investigations and disciplinary actions
• Defended auditors in depositions before the SEC, which ultimately filed a civil action against management but concluded that the auditors did no wrong
• Represented participants and targets in multiple SEC investigations, actions and third-party subpoenas to accounting firms and auditors, including collection and production of electronic workpaper files and other e-data