The In Pari Delicto Defense to Accounting E&O Claims

By: Eris Bryan Paul, Robert M. Girardeau and Brent Almond
Professional Liability Defense Quarterly

Fall 2015, Volume 7, Issue 4

Accounting firms, especially those who provide audit services, often find themselves being forced to defend litigation brought by a plaintiff or plaintiffs who stands in the shoes of a former audit client. Often times, these plaintiffs are shareholders, receivers, litigation trustees or bankruptcy trustees. The plaintiffs often allege that the accounting firm failed to discover some fraud or other wrongdoing within the client corporation or worse, that the accounting firm was even complicit in that fraud or wrongdoing. If the corporate client itself was involved in some type of fraud or misconduct, a powerful defense to all of claims brought by the plaintiff includes the defense of in pari delicto.

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