When things go wrong, don't sue us

Moves over the vexed question of liability are pleasing accountants

In the words of Keith Woodley, president of the Institute of Chartered Accountants, they are not yet hanging out the flags. But nevertheless, a cautious optimism is abroad in the accountancy profession.

After a lengthy campaign spearheaded by the institute and the leading firms, the Government has agreed to look into the vexed issue of joint and several liability. This is a long-established common-law principle that makes defendants in a civil action liable to pay all the damages, regardless of the degree of fault. It has caused particular grief to auditors because they have been widely sued over the spate of corporate collapses since the late Eighties. But it applies equally to other professionals, such as architects, surveyors and solicitors, which have begun to complain about it as they too have started to become the subject of actions.

Not that reform is necessarily within sight. The newly appointed corporate affairs minister, Phillip Oppenheim, has asked the Law Commission to carry out a feasibility study - in other words, a report about a report. But Bruce Picking, technical director at the institute, says his organisation is "encouraged by what may be a change of attitude".

This move - if such it is - has in all likelihood been influenced by developments abroad. Every slightest move away from the principle of joint and several liability in jurisdictions as varied as the United States, Australia and New Zealand has been trumpeted by the accountancy profession as vindication of its case.

At the same time, the rising tide of professional litigation in other fields has helped to dispel the notion that this is purely an accountant's beef. Recent research has found widespread support for reform in the construction industry, while lawyers have started to talk about the issue as if it was a new threat.

All of this has led some within the accountancy profession to suggest that swifter progress in winning over public opinion might have been made had all the professions banded together to press for a change in the law. That would have smacked less of special pleading on behalf of auditors, they say.

However, Graham Ward, the Price Waterhouse partner who is chairman of the institute's steering group on the issue, rejects the idea. "It would have been a pretty lengthy process to consult all the professions," he said, adding that the accountants went alone because they felt the problem was more urgent for them than for others.

As it is, progress in other parts of the world has meant that - while the UK accountancy profession was in the lead when it first broached the issue a few years back - it is now having to catch up, Mr Ward maintains.

The Law Commission team led by Professor Andrew Burrows is expected to report by the end of the year. Meanwhile, Mr Ward and colleagues from the institute and big firms have a meeting scheduled with Mr Oppenheim for November. At this they will be pressing the case for amendment of s310 of the Companies Act - which bars auditors from following other professionals in agreeing, with clients, limits on their liability - as well as renewing their support for the DTi's initial tentative move.

It might be that ministers are feeling under pressure to deal with an issue that many in the accountancy profession had given up hope of seeing come under early consideration. Not only is there the question of Britain being at a disadvantage compared with competitors, but the profession is also claiming the support of the Labour Party. It has apparently even been suggested within the party that the current practice of the joint and several liability principle threatens the civil rights of partners.

Understandably perhaps, Mr Ward, who was on holiday when the decision to set up the Law Commission study emerged - pronounces himself more encouraged now than he was when he left the office for his break. But he is careful to point out that there is still a long way to go. Using the analogy of a road trip from London to Edinburgh, he says: "We've only got about as far as the first service station on the M1."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Arts and Entertainment
Under the skin: Sarah Kane in May 1998
theatreThe story behind a new season of Sarah Kane plays
Arts and Entertainment
Preening: Johnny Depp in 'Mortdecai'
filmMortdecai becomes actor's fifth consecutive box office bomb
Bradford City's reward for their memorable win over Chelsea is a trip to face either Sunderland or Fulham (Getty)
Lars Andersen took up archery in his mid thirties
Focus E15 Mothers led a protest to highlight the lack of affordable housing in London
voicesLondon’s housing crisis amounts to an abuse of human rights, says Grace Dent
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Client Services Manager - Relationship Management - London

    £30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

    Recruitment Genius: Credit Controller / Customer Service

    £18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

    Guru Careers: In-House / Internal Recruiter

    £25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

    Recruitment Genius: Tax Assistant

    Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

    Day In a Page

    Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

    Auschwitz liberation 70th anniversary

    Woman sent to three Nazi death camps describes surviving gas chamber
    DSK, Dodo the Pimp, and the Carlton Hotel

    The inside track on France's trial of the year

    Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
    As provocative now as they ever were

    Sarah Kane season

    Why her plays are as provocative now as when they were written
    Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

    Murder of Japanese hostage has grim echoes of another killing

    Japanese mood was against what was seen as irresponsible trips to a vicious war zone
    Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

    Celebrities call on David Cameron to take more Syrian refugees

    One young mother tells of torture by Assad regime
    The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

    The enemy within

    People who hear voices in their heads are being encouraged to talk back
    'In Auschwitz you got used to anything'

    'In Auschwitz you got used to anything'

    Survivors of the Nazi concentration camp remember its horror, 70 years on
    Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

    Autumn/winter menswear 2015

    The uniforms that make up modern life come to the fore
    'I'm gay, and plan to fight military homophobia'

    'I'm gay, and plan to fight military homophobia'

    Army general planning to come out
    Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

    What the six wise men told Tony Blair

    Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
    25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

    25 years of The Independent on Sunday

    The stories, the writers and the changes over the last quarter of a century
    Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

    Homeless Veterans appeal

    As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
    Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

    Smash hit go under the hammer

    It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
    Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

    The geeks who rocked the world

    A new documentary looks back at origins of the computer-games industry
    Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

    Belle & Sebastian is taking a new direction

    Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea