Shareholder & Securities

Accounting Malpractice

11/28/2016

Susman Godfrey is one of the most experienced law firms in the United States at handling cases involving accounting and audit issues. For over 30 years, we have been successfully representing clients in professional negligence lawsuits against public accounting firms.  We’ve litigated cases involving negligently prepared securities offerings, cases involving audit malpractice, and cases involving tax malpractice.

Over the last few years, our clients in accounting- and audit-related cases have obtained substantial recoveries.  Susman Godfrey has appeared in such cases in courts across the country, including in Illinois, California, Georgia, Texas, New York, New Jersey, and Washington.

We regularly take on the most complex, cutting-edge accounting issues, from valuation of sub-prime mortgage-backed securities to determining the proper accounting treatment for Enron’s complex transactions with off-shore Special Purpose Vehicles.  We not only have sufficient experience to understand these issues, we know how to break them down and explain them so that a judge and jury can understand them, too. 

Susman Godfrey typically works under contingent fee arrangements that enable clients to pursue cases that would otherwise be out of reach.  Even for clients able to finance high-stakes accounting litigation, contingent fee arrangements compensate counsel on the basis of results rather than hours worked.  Susman Godfrey brings to bear the talents and resources necessary to achieve success for its clients under fee arrangements that provide a mutual sharing of risks and rewards.

  • Susman Godfrey successfully settled audit and tax malpractice claims brought against PricewaterhouseCoopers by the bankruptcy estates of sister companies Metropolitan Mortgage and Summit Securities.  Metropolitan and Summit’s bankruptcies were the largest in the history of eastern Washington, and Susman Godfrey was chosen from a number of applicants to represent the estates for all professional malpractice claims, including the suit against PricewaterhouseCoopers and one other audit firm.  Accounting issues in the PwC case included treatment of a complex international tax shelter, valuation of mortgage backed securities, and reporting various sophisticated commercial real estate transactions.  The settlement was announced on March 3, 2008, the day trial was scheduled to begin in the U.S. District Court for the Eastern District of Washington in Spokane.
  • After overcoming various summary judgment motions, Susman Godfrey successfully settled an action it had brought against PricewaterhouseCoopers on behalf of over ninety lenders who had advanced over $1 billion in funds to Safety-Kleen Corporation. Settlement was finalized on the day trial was scheduled to begin in state court in Atlanta, Georgia.  The suit alleged negligence by auditor PricewaterhouseCoopers (and its predecessor, Coopers & Lybrand) in its failure to discover massive accounting fraud and violations of GAAP. Susman Godfrey was selected to prosecute this action by a committee of the lenders after an extensive search and interview process involving other premier plaintiffs' law firms from across the country. By agreement, the actual amount of the settlement must remain confidential.
  • PricewaterhouseCoopers LLP agreed to resolve lawsuits by Anicom Inc. shareholders and creditors, who accused the accounting firm of acting recklessly by certifying the company's financial statements during the years leading up to its January 2001 bankruptcy-court filing. According to the October 29, 2002, Wall Street Journal, the "payment is among the larger settlements to date over an alleged audit failure by PricewaterhouseCoopers."
  • In September 2000, Susman Godfrey finalized a substantial settlement for an accounting malpractice action on behalf of its client, Hollywood Casino Corporation, against Arthur Andersen stemming from the alleged failure to provide correct tax advice concerning the spin-off of several subsidiary companies. By agreement, the actual amount of the settlement is confidential.