More and more attorneys are turning to certified public accountants to provide litigation support and fraud investigations. Sometimes called forensic accounting, it’s a hot and growing specialty that has CPAs providing financial expertise for legal cases that once was reserved for economics professors.
A few years ago, James A. Koerber of Hattiesburg decided he wanted to do more litigation support after attending a national litigation conference sponsored by the American Institute of CPAs in Tempe, Ariz. He realized how litigation services would complement the valuation services he was providing. He and his partner, Annette P. Herrin, made the decision to develop this support, including damage calculations for lost profits, personal injury and wrongful death, employment discrimination, breach of contract, business interruption claims and financial analysis for punitive damage purposes.
“I had received some calls from attorneys asking me about doing these things, so I came back from the conference and began to develop this support,” he says. “It took a while to fully develop it after I got certification through the Association of Certified Fraud Examiners.”
Herrin, who earned her accounting degree from the University of Southern Mississippi, also received this national certification.
Koerber says attorneys are learning to use CPAs for litigation, and other CPAs are often turning to accountants specializing and having certification in this service.
“Attorneys used to use economics professors to determine financial damages. They were good, but CPAs can provide more analysis,” he says. “Having a CPA to handle this type of work was new and different to many attorneys.”
After being hired on a few lost profits and personal injury cases and being successful, he says attorneys noticed their work and began contacting them. “From there, the litigation services aspect of our firm grew dramatically,” he said. “This service, along with business valuations, quickly became our full-time endeavors.”
Ralph Ross, senior tax partner with the Smith, Turner, Reeves CPA firm in Jackson, says most CPAs are qualified to provide litigation support but some are more of the mindset to do it than others.
“We provide services for attorneys when they have issues requiring verification of profits, damages and loss of property,” he says. “The court wants an expert to analyze financial documents. It involves going to court and preparing nice papers.”
Litigation support is only approximately 10% of the firm’s practice among its 55 accountants.
Koerber and his partner, however, are drawn to providing this service. “I enjoy working with attorneys and helping clients,” he says. “It’s nice when we finish a case and get a note from someone thanking us, or lawyers call that were referred to us by lawyers we helped. It’s a sense of service to others.”
He feels some CPAs are testing the waters before getting involved permanently in litigation support while others are spinning off those services into a separate entity such as he and Herrin did.
“This area will become a larger percentage of accounting firm business going forward,” he adds. “There’s a demand for it, and part of it is the awareness of attorneys to hire CPAs.”
He points out that this service is among the top three services found to be increasing among CPA firms in a survey conducted by Accounting Today magazine.
These Mississippi CPA firms say it’s important that they determine there is no conflict with respect to any of the parties to the case before beginning an investigation.
“That’s the first thing we do is check to make sure there are no conflicts,” Koerber says.
It’s equally important to walk away from cases in which an attorney tries to get him to slant testimony.
“You’ve got to be true to your opinion, and you’ve got to be an advocate for the attorney,” Koerber says. “We’ve made a point of working with very good attorneys and it rarely happens.”
Although he does go to court to testify, nine out of 10 cases settle out of court, a statistic that’s consistent with national averages.
Contact MBJ contributing writer Lynn Lofton at firstname.lastname@example.org.