Third-party liability: the sun is coming out today

Just as the liability cloud appeared darkest, several recent court decisions indicate that the future for accountants might not be as dark as it once appeared. These decisions, at both the state and national levels, have somewhat restricted the parties who may bring suit and have reduced the grounds on which a suit can be based. Moreover, a few states have passed laws that provide accountants with limited protection against 3rd-party liability. In Bily v. Arthur Andersen & Co., the California Supreme Court diverged from the foreseeability approach and set forth a new approach for determining accountants' liability. In 2 significant cases, - Bob Reves v. Ernst & Young and Central bank of Denver NA. v. First Interstate Bank of Denver NA. - the US Supreme Court has restricted the use of certain statutes to bring civil suits against accounting firms and other professionals. Although lawsuits will continue, it appears that attitudes concerning 3rd-party litigation against accounting firms are changing.