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; request a free guide on NISAs from Hargreaves Lansdown

News
The cartoon produced by Bruce MacKinnon for the Halifax Chronicle-Herald on Thursday, showing the bronze soldiers of the war memorial in Ottawa welcoming Corporal Cirillo into their midst
news
News
The Edge and his wife, Morleigh Steinberg, at the Academy Awards in 2014
peopleGuitarist faces protests over plan to build mansions in Malibu
Voices
Nigel Farage has backed DJ Mike Read's new Ukip song
voicesNigel Farage: Where is the Left’s outrage over the sexual abuse of girls in the North of England?
Life and Style
The Zinger Double Down King, which is a bun-less burger released in Korea
food + drinkKFC unveils breadless meat beast
PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SQL Developer with T-SQL, Watford, Hertfordshire - £350 - £360

    £350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...

    Chief Financial Officer

    120-150k: Accountancy Action: We are looking for an experienced CFO from a min...

    IT Systems Business Analyst - Watford - £28k + bonus + benefits

    £24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

    Day In a Page

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

    A crime that reveals London's dark heart

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
    Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

    Lost in translation: Western monikers

    Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
    Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

    Handy hacks that make life easier

    New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
    KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

    KidZania: It's a small world

    The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
    Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

    'Renée Zellweger's real crime was to age'

    The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
    From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

    Disney plans live-action remakes of animated classics

    From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
    Thousands of teenagers to visit battlefields of the First World War in new Government scheme

    Pupils to visit First World War battlefields

    A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
    The 10 best smartphone accessories

    Make the most of your mobile: 10 best smartphone accessories

    Try these add-ons for everything from secret charging to making sure you never lose your keys again
    Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

    Liverpool v Real Madrid

    Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
    West Indies tour of India: Hurricane set to sweep Windies into the shadows

    Hurricane set to sweep Windies into the shadows

    Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
    Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

    A new American serial killer?

    Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
    Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

    Sting to trap paedophiles may not carry weight in UK courts

    Computer image of ‘Sweetie’ represented entrapment, experts say
    Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

    Return to Fukushima – a land they will never call home again

    Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
    Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

    Wildlife Photographer of the Year

    Intimate image of resting lions claims top prize
    Online petitions: Sign here to change the world

    Want to change the world? Just sign here

    The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?