Accounting malpractice describes professional negligence, errors, or misconduct by an accountant or accounting firm that results in financial harm to their client or other parties. Generally defined as when an accountant fails to meet the required standard of care in performing their duties, those who are harmed frequently seek justice from the legal system. Though litigation can be effective, mediation and arbitration are two alternative dispute resolution (ADR) methods that are more flexible, cost-effective, and confidential options.

• Mediation – Choosing mediation turns your dispute into a dialogue between both the accountant/accounting firm accused of malpractice and the party that suffered harm, with an impartial third-party mediator helping the negotiations. Though the mediator facilitates communications, they do not make decisions; rather, they work to create an environment where both sides can discuss their grievances and interests openly.

The advantage of turning to mediation in an accounting malpractice case is that a successful mediation preserves the relationship between the two parties, offers greater control for both sides of the outcome, and avoids a lengthy and expensive court process. It’s important to note that the outcome of mediation is not binding unless both parties reach a formal agreement, so it is not always successful.

• Arbitration – Choosing arbitration means you’ll engage in a more structured and binding process in which an arbitrator or a panel of arbitrators will listen to evidence presented by both sides and then make their own decision. Arbitrators are generally chosen because of their existing expertise in the area being discussed, thus leading to a more informed and fair ruling. The outcome of arbitration is final and enforceable for both parties.

Like mediation, arbitration saves time and money when compared to the litigation process, though the process does allow for the presentation of expert witness testimony and legal arguments that can be expensive. Unlike mediation, arbitration offers closure and certainty once a decision has been made.

While many think going to court is the only way to resolve a legal dispute, alternate dispute resolution is well worth considering.  Both mediation and arbitration provide effective means of resolving accounting malpractice disputes and can reduce the time and cost involved needed to reach a resolution.

For information on how we can help you address an accounting malpractice issue, contact us today to set up a time to discuss your situation.