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Coalition urges litigation reform.

A coalition of business and professional organizations supporting litigation reform, including the American Institute of CPAs, is working with members of Congress to develop a litigation reform package capable of winning passage in the House and Senate.

The Coalition to Eliminate Abusive Securities Suits (CEASS) said the nation's six largest CPA firms spent $477 million to settle or fight lawsuits in 1991. According to the coalition, that figure represents 9% of the firms' more than $5 billion in combined auditing and accounting revenues last year.

Moreover, many midsized and small accounting firms responding to a recent AICPA member survey said they have found it necessary to eliminate auditing services or restrict them to select, "low-risk" clients in industries in which there is little risk of increased liability.

Proportionate liability. One of CEASS's goals is to replace joint and several liability (under which any codefendant in a securities fraud case can be held liable for all damages awarded) with proportionate liability (under which penalties are based on relative contribution to any harm caused).

The coalition also advocates passage of reforms affecting fee shifting and requiring stronger proof of allegations.

A litigation reform package acceptable to Congress is expected to be introduced in the near future, with hearings later this summer.

The coalition's 120 members include accounting firms, insurance underwriters, manufacturers, retailers and trade associations.
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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Aug 1, 1992
Words:223
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