Negligence cases start to rise sharply

Has the day of reckoning arrived for accountants, deserved or not?

Research released this week claimed that professional negligence claims
against accountants had jumped dramatically suggest­ng the profession was
beginning to see the implications of the crisis and recession.

A look at the figures showed the change had been marked. The Ministry of
Justice told law firm Reynolds Porter Chamberlain that the Chancery Division of
the High Court had seen 13 cases lodged, more than in any of the previous four

Jane Howard, a partner at RPC, said the figures suggest the credit crunch has
played a role. Robert Fink, of Fenchurch Law, said claims were increasing
“across the board as a result of the recession”.

But some care has to be taken with the results of this study. The numbers
reflect just the Chancery Division, used usually for larger claims. There may be
cases in other divisions of the High Court. In addition, The Ministry of Justice
information is not clear on whether these 13 cases related to events during the
recession or go further back, though experts say they would be surprised if many
of them were unrelated to the crisis.

There is also no telling what stage these cases are at. They may not
materialise as full-blown court-room battles.

But lawyers say there are still fewer cases coming through the court than the
period after the Enron, WorldCom and Parmalat scandals. However, then these 13
might be the outriders of a far larger wave of claims still to come.


Care needs to be taken with the numbers provided here. There is clearly an
uplift in cases in the courts but without more information about what has caused
them, they remain difficult to properly interpret. These figures may or may not
be a sign of something bigger to come.

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