As a US lawyer for an established law firm you are usually encouraged to
avoid attacking America’s corporate elite as they tend to be the clients who pay
the bills. But Steven Thomas, then partner with law firm Sullivan &
Cromwell, did just that with a winning result, and even more unusually on a
Acting on behalf of clients Banco Espirito Santo, Thomas sued US auditors BDO
Seidman in 2007 with the court finding the firm to be ‘grossly negligent’, a
verdict BDO is appealing against. The jury awarded $351.7m (£248m) in punitive
damages to Banco ES, bringing BDO’s total liability to $521.7m the largest
ever against a US accounting firm.
Meanwhile in a separate action, plaintiffs Banco ES won the right to have its
claim heard before a jury that BDO International should be jointly liable. Right
now Thomas must be BDO International’s biggest headache.
What’s going to happen…
The appeal, due to start this week but now postponed until May, has the
potential for setting a new precedent for making international accountancy
networks liable for their US member firms, meaning that BDO Stoy Hayward
International could face another hefty bill at the very least.
The case hinges on a ‘right to control’ point which, if proved, would be the
first instance of a network facing punishment for a member firm’s problems. The
case has huge resonance for the profession at large.
‘There’s a likelihood [if the appeal is won] that in future US litigations,
the Big Four international networks are going to be held liable as well,’ Thomas
Thomas’ goal it seems is to make networks liable. If he succeeds, it will
open the way for a whole host of liability claims in different countries against
the firm and its global brand.
If Thomas’ record is anything to go by then his goal may well be achieved.
His tenacity is vividly illustrated in his ‘harder and stronger’ mantra when the
presiding judge in the initial trial called a mistrial after prejudicial
information was revealed in court.
The second time round the Miami-based lawyer was clearly determined to avoid
another slip up, and avoid it he did.
Unlike most high-profile lawyers, Thomas made his career rather
unconventionally. From a small town in the Midwest state of Missouri he worked
his way up quickly to achieve his position at the top of the American Lawyer
100, the top-grossing law firms in the US.
In a statement BDO said: ‘BDO Seidman continues to pursue its appeal of the
original jury verdict and the related damages in this case. This is a lengthy
process that could take up to a year. There have been no new developments.’
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