Corporate Governance

How to Mitigate Liability with a Second Opinion

As a professional, do you ever think, as part of your normal course of business, having another, independent, professional review your work, and conclusions? Think of it as insurance policy? Anytime you provide professional services to high risk, highly volatile situations, where clients are fervently trying to think of people to sue, good Corporate Governance requires processes and controls with checks and balances. This is why a CPA firm that audits public companies always requires a second partner, not involved in the audit, to review the audit before the audit is signed by the firm. When things go badly having a second opinion confirming your plan of action, prior to initiation, may provide a strong defense against negligence.

Negligence is one of the most common causes of action that will be brought against a professional. In most jurisdictions, the defendant has to prove the negligence of the plaintiff or claimant; in others, the burden is on the plaintiff or claimant to disprove their own negligence. The essence of negligence is "carelessness." Professional negligence is predicated on the fact that the defendant has represented him or herself as having more than average skills and abilities, and owes a higher duty of care than a layperson. A defendant has breached, or not met, their responsibilities when they haven't met the standards against which they are legally held to. These standards get very nebulous, and murky, when discussed by two different attorneys. All your client has to do is to find an expert witness that will testify that your work contributed to their loss, that you were negligent, and you may be in a lawsuit. I don't know many people that act flawlessly in all situations.

For a negligence claim, a plaintiff must establish four elements:

  • Duty of care
  • Breach of duty
  • Causal connection; and
  • Actual loss or harm

Second opinions are frequently sought when appraising valuable and unusual property. When it comes to complex legal matters, business people frequently feel more comfortable with a second opinion. Independence enhances the credibility, role, and status of the opinion. Your client will likely feel more comfortable, and therefore be more cooperative, if you provide them with a second opinion. Second opinions are frequently easier to perform, don't include execution, and therefore generally costs a fraction of the original engagement.

Now don't confuse a second opinion with opinion shopping. Obtaining a second opinion has the objective of obtaining the right answer. Opinion shopping involves finding an expert who supports a proposed activity, which may, or may not be appropriate.

Getting a second opinion is a reasonable approach to dealing with complex matters. Although more common in other professions, when undertaken in an open and forthright manner it can help the professional reasonably assure their clients that the proper treatment was provided, and therefore has the added value of mitigating potential liability.

Our thanks to this article's author, Bart Siegel, CPA, CFE, FCPA, MBA, Owner of Siegel Forensic Accounting and Consulting, LLC ( Siegel Forensic Accounting and Consulting is a forensic accounting firm located in the Tampa, FL area and specializes in assisting victims of investment fraud, detecting fraud and theft, detecting material misrepresentations, and other forensic investigative services. Mr. Siegel is a Forensic Certified Public Accountant (FCPA), Certified Fraud Examiner (CFE), and Personal Financial Specialist (PFS). Bart can be e-mailed through his web sites or contacted by telephone at (813) 831-3849.

DISCLAIMER: This Corporate Governance article is provided as an informational resource and does not constitute legal advice. The information provided in this article is based on the laws in effect at the time the article was published. Laws related to this article's topics may change over the course of time. Visitors to this website should not rely upon or act upon this information without seeking professional legal counsel.


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