KPMG faces £10m bill in landmark case
The House of Lords has opened the door on a whole new area of liability for accountants in a landmark ruling that KPMG owes a duty of care to the Law Society's compensation fund.
Partners at the firm could now be facing a bill for £10m after the Law Society confirmed this week it would push ahead with a claim for damages over a report prepared for a Sussex law firm.
The case goes back to 1992 when law firm Durnford Ford was found to be defrauding clients. The Law Society, after paying out more than £8.5m in compensation to 300 clients, then alleged KPMG had acted negligently in preparing financial reports for the firm.
KPMG was appealing in the House of Lords on Monday against an earlier decision by the High Court that the firm owed a duty of care, but failed.
The precedent-setting Lords decision, which does not allow an appeal, leaves the way open for the Law Society to make other claims against accountancy firms preparing financial reports for law firms.
A KPMG spokesman said: ‘KPMG will strenuously defend any allegation of negligence.’
The Law Society requires all member firms to submit an annual financial report prepared by accountants, though not a full audit.
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Accountants face fresh liability fears