New civil procedure rules could slice the fees earned by accountancyand open door to ‘no win, no fee’ code. firms which act as expert witnesses during litigation, and ultimately force smaller firms out of the market completely.
Under the reforms – drawn up by Master of the Rolls Lord Woolf, and due to take effect later this month – accountants charged with negligence face a dramatic increase in the workload involved in defending themselves.
At the same time, total fees paid to accountants for acting as experts could also be reduced, as, for the first time, the courts will be able to appoint a single expert.
BDO Stoy Hayward head of litigation Gervase MacGregor said: ‘The rules will get rid of a lot of firms who dabble in forensic accounting.’
MacGregor argued that these firms would not be able to compete with larger practices when the justice system changes on 26 April. After that date, the courts will become far more proactive in cases and appoint their own expert in cases where only one opinion is deemed to be necessary. Current practice allows each side to employ its own expert.
The court will also be allowed to limit the fees paid to experts, and, with the number of experts required halved from two to one, the move could seriously damage firms’ ability to make money.
Grant Thornton forensic services head Philip Kabraji said firms also needed to be aware of the provisions of the Access to Justice Bill currently before parliament, and part of the Woolf reforms.
The Bill seeks to restrict the availability of legal aid, which will also have a significant impact on accountancy firms doing publicly funded work, while recommending the establishment of conditional fees – ‘no win, no fee’. One solicitor warned: ‘Expert witnesses should be impartial – this new structure could be problematic.’
Thornton added: ‘We do legal aid work in many smaller offices where the costs are not as high, we are going to have to adapt to the new rules.’
Accountants charged with negligence also face a blizzard of new rules covering the disclosure of documents before a case goes to court. The reforms are intended to expedite the resolution of disputes without the need for intervention by the courts.
Travers Smith Braithwaite litigation partner Stephen Paget-Brown observed that accountants may end up being sued more often under the new rules rather than less because access to such documents could potentially convince a plaintiff to pursue a claim which they otherwise might have dropped.
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