DFK UK & Ireland

The Accountants role in Dispute Resolution

The Accountants role in Dispute Resolution – We can be more than just experts!

I remember when accountancy firms referred to ‘Litigation Support’ in order to describe the services we could provide in assisting the legal process to resolve commercial disputes.

This of course is now more commonly referred to as Forensic Accountancy which encapsulates the process of providing expert opinion for use in civil and criminal litigation cases.

In cases of litigation the ‘expert ‘or ‘forensic’ accountant has an underlying duty to the court in accordance with both the CPR and CrPR for England & Wales to report conclusions based upon the evidence and their expertise.

So my question is, “Is this the only role the accountant can play in resolving commercial disputes?”

I was once taught that conflict in business was inevitable and ultimately positive if addressed but unchecked conflicts lead to disputes, which are nearly always negative and destructive.

In an economic era that increasingly places our clients under risk of conflict and with cost pressures more important than ever, surely a quicker and more proportionate response to commercial disputes is something that accountants should actively encourage amongst their clients.

I am of course referring to ALTERNATIVE Dispute Resolution or ADR as an area in which the accountant, forensic or not, can play a positive role in resolving business disputes by embracing and encouraging recognised ADR procedures.

The principle ADR procedure to have risen in popularity, largely due to its confidential and proportionate approach is that of Mediation.

Mediation is defined by CEDR as a "flexible process conducted confidentially in which a neutral person actively assists parties in working towards a negotiated agreement of a dispute or difference, with the parties in ultimate control of the decision to settle and the terms of resolution.”

The role of the Mediator is to assist the parties’ settlement or agreement and can quite often be that of facilitator. To manage the expectations of the parties and to encourage a multi dimensional agreement can often reach a more satisfactory conclusion than the laborious and one dimensional settlement achieved in litigation.

As professionals we can influence the long term use of ADR through our daily advisory services such as the drafting and inclusion of appropriate dispute resolution clauses in shareholder and partnership agreements in order to avoid unnecessary complications when the inevitable dispute arises.

Quality training is available via CEDR, The Academy of Experts and CIArb together with advice on procedures and engagements as Mediators.

Of course we should not forget that as forensic accountants we are indeed ‘experts’ in our own fields and ADR is not limited to the use of mediation.

As experts we can play valuable roles, particularly in the areas of ‘Expert Determinations’, ‘Arbitration’ and the growing area of early ‘Neutral Evaluation’.

The area of share valuations and indeed goodwill valuations can benefit greatly from an expert determination clause whereby an independent and suitably qualified expert can deliver a binding determination and avoid the need for protracted litigation. Likewise the potential for accountants to take appointments as arbitrators, particularly where an existing arbitration clause exists in, for example, a Shareholders agreement, is increasingly attractive to the business community, as once again there is potential to minimise costs and loss of ‘management time’.

So I believe the answer to my question is No, we can play a varied role in resolving commercial disputes and not just that of Expert Witness.

Christopher McCandless ACIArb QDR is an accredited mediator and a partner in Johnston Kennedy DFK, the DFK UK & Ireland firm for Northern Ireland based in Belfast.

Forensic@johnston-kennedy.com

www.johnston-kennedy.com

www.dfkuk.com

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