John P Coffey, an eminent lawyer with New York’s Bernstein, Litowitz, Berger and Grossmann, used his appearance before the group to lay into the firms and insist that the case for a cap on liabilities had not been made by them.
The group, appointed by the US Treasury secretary and headed by the tough minded former SEC chief Arthur Levitt, is looking at the concentration of the audit market, but is considering a cap just as it was considered here in the UK and then introduced as a quid-pro-quo to audit firms for tighter regulation.
But Levitt may not be so taken with the idea. The US is a litigious nation and limiting up front what can be claimed may not sit well with its legal culture. If a cap fails to find favour, however, what use is a cap in the UK?
It would, of course, limit the damage from UK court action but open-ended claims in the US would still leave a branch of the firm on this side of the water vulnerable.
The question is why? If legal action in the US killed off the firm, the reputational damage to the firm worldwide is still likely to be considerable, just as with Andersen.
More to the point, it is likely to stymie any thoughts that a UK firm could formally merge with a US member of the network, as they have started to do in Europe. The risk would be too big or at least as big as the Big Four faces in not having a cap.
UK seniors partners must be watching proceedings across the Atlantic with some significant interest.
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