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NY STATE SOCIETY OF CPAs ON NEED FOR LEGAL REFORM

 NEW YORK, Nov. 25 ~PRNewswire~ -- The following statement was issued today by Robert L. Gray, CPA, executive director of New York State Society of CPAs:
 The recent settlement between Ernst & Young and government agencies demonstrates the ineffectiveness of the current legal system and highlights the need for reform. Alternative dispute resolution is now more effective for both the government and professional firms.
 As these arrangements continue to replace litigation, it appears obvious that the legal system is not serving the interest of the public, government or business.
 The current legal system often places professional firms in a position where it is less expensive for them to settle, even when they are clearly not at fault, than to pay exorbitant legal fees to prove the firms' innocence in court. In fact, accounting and law firms and government agencies agree that litigation is often much more costly than alternative resolutions.
 Under today's legal system of joint and several liability, whether an individual is actually guilty often is not longer the issue. Someone can be held fully liable for the wrongdoings of another, even if that person is at another location far removed from the incident.
 Likewise, a party who is judged only 1 percent responsible for causing damages could be held liable for 100 percent of the settlement. Parties who believe they are innocent cannot afford to take that risk of being found even slightly responsible and are therefore "forced" to settle. This is particularly unfair with bankrupt companies -- or insolvencies as such the S&Ls -- when "peripheral defendants" become important lawsuit targets, regardless of responsibility, due to the availability of deep-pocket finances.
 The New York State Society of CPAs advocates reform because the current legal system erodes the rights of defendants in lawsuits and expensive defensive actions impose a "hidden tax" on the public that increases the cost and limits the availability of goods and services.
 A number of CPA firms will not audit high risk companies including some banks and also emerging businesses, hi-tech companies and financially troubled institutions. This, in turn, effects the nation's capital markets: Without audits, investors, banks and others will not provide financing. Companies also now think twice before investing in innovative products. In the end, it is the public who pays.
 We agree that any CPA or other professional found guilty of alleged fraud, whether in an S&L case or other instance, should be held fully accountable and liable for his or her actions. Yet it is only fair that there should be some proportionate liability so that only those directly responsible are penalized.
 -0- 11~25~92
 ~NOTE TO EDITORS: Robert L. Gray, CPA will be available for additional comments on Friday, Nov. 27 - Sunday, Nov. 29 at 914-424-3946, after Nov. 29, call the contact below.~
 ~CONTACT: Danielle D'Angelo, NYSSCPA manager - public relations, after Nov. 29, 212-973-8356~


CO: New York State Society of CPAs ST: New York IN: SU:

LR-AH -- NY048 -- 1588 11~25~92 15:05 EST
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Date:Nov 25, 1992
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