Irish ICA joins LLP reform bandwagon

Accountants in the Irish Republic are lobbying the Dublin Government for a change in the laws of joint and several liability which, they say, makes them easy prey for clients looking to sue.

The campaign, being led by the Irish ICA, wants the provision of joint and several liability in the 1963 Companies Act amended.

The institute is seeking an urgent meeting with the relevant ministers to press its case. According to its chief executive, Sean Dorgan, the profession wants the law changed from joint and several liability to proportionate liability.

Dorgan, argued that, as well as protecting accountants from litigious clients, there could be other benefits for the Irish Republic in amending the legislation. ‘If the Government made this jurisdiction congenial to professionals, we might find more of them relocating here from other countries which are not so congenial,’ he said.

Dorgan claimed that the problem of litigation is an international one and is not confined to accountants, but affects other professions such as lawyers and architects. ‘When a problem arises with a client, the first thing the client does is think about suing the party with the deepest pockets.

‘In the area of commercial law, we are not dealing with innocent consumers who have been wronged. We are dealing with well-informed people.

‘For accountants, the problem is that it is impossible to put an adequate amount of insurance cover in place, given the size of the claims going before the courts these days and the prohibitive cost of such insurance.’

Dorgan added that if, under current legislation, accountants were sued for a large amount of money and lost, ‘it is technically possible that they could forfeit their home and savings, as well as their livelihood, in order to pay the compensation’.

The profession had decided to begin its lobbying campaign at this time, he said, because of changes which were taking place in other jurisdictions on the same issue.

In the UK, Dorgan claimed, there was now a trend for accountancy firms to base themselves in Jersey, ‘where the legal environment allows them to establish limited liability partnerships’.

In the US, he said, a Federal law had recently been passed, despite a veto by President Clinton and opposition from trial lawyers, which effectively changes joint and several to proportionate liability.