May 13, 2013 Articles

Common Discovery Disputes in Accountant-Liability Litigation

An overview of common arguments for and against the production of certain categories of documents.

By George J. Coleman

Courts across the nation are allowing more discovery, and accountant-liability cases are no exception. Nowadays it’s a given that the accountant’s work papers and time records for the engagement in question will be produced. After that, a variety of discovery disputes routinely arise. Young lawyers are often directly involved in responding to discovery requests and filing motions to compel discovery responses.

Because both sides, especially in audit cases, usually can find ample case law to support their positions, the case law usually isn’t determinative. (For that reason, citations are largely omitted from this article.) It usually comes down to the court’s exercise of its discretion. Courts weigh relevance against burden and prejudice, often fashioning remedies that employ protective orders, redaction of irrelevant or proprietary material, and in camera reviews to allow some but not all of the requested discovery. Given the arcane nature of some accounting issues, expert opinion sometimes comes into play, and courts have appointed independent accountants as discovery masters to help resolve these disputes. Courts frequently order some production, but only after narrowing the request to, for example, just those portions of the audit manual that are mentioned in the work papers.

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