Attorney Consultations Help Keep a Practice Healthy

by Jonathan S. Ziss, JD | Mar 01, 2017
Pennsylvania CPA Journal
Insightful lessons can be learned by reviewing professional liability issues. With this in mind, Arthur J. Gallagher & Co. provides this column for your review. For more information about liability issues, contact Irene Walton at

For many practitioners, an hour in a dentist’s chair is more appealing than the mere thought of picking up the phone and calling an attorney. This mind-set needs to change for the health and well-being of your practice.

Dentists, generally speaking, keep us away from potential harm and get us out of trouble. Preventive maintenance helps to shield us from pain and to smile without self-consciousness. When a repair issue occurs, they get us back in the game, commonly without too much time, expense, and personal discomfort.

For those who make regular visits, there is a familiarity with the dentist that helps manage potential anxiety. Your dentist may be in your contacts list. You know the name of your hygienist. You know what dental services will cost and you know how you will pay.

Attorneys can serve much the same role in the preservation of professional hygiene as dentists do vis-à-vis oral hygiene. Attorneys can provide routine preventive maintenance that will keep an accounting practice running smoothly, and they can respond to and repair problems should they arise … commonly without too much time, expense, or personal discomfort.

Of course, the mind-set surrounding legal services is much different than the mind-set surrounding a visit to the dentist.

There is a psychic unease (call it a shame response) that often accompanies contacting counsel. It can feel a bit like failure for some. This is silly. In fact, it is irrational and self-destructive. It probably comes from lawyers being popularly viewed as a last resort; there for those who have “gotten themselves into trouble from which they can’t get themselves out.”

There is also uncertainty over the cost of legal consultation (and who will bear that cost) and a touch of ego. Many practitioners think that they know better, or at least know enough, to solve their own legal problems.

If you recognize yourself here, even a little, know that my goal is to persuade you that a half-hour spent on the phone chatting with your attorney is every bit as beneficial as a half-hour spent with a dental hygienist, and possibly more so.

Let’s consider the top reasons to consult with counsel.

Responding to requests for comfort letters – Think of a comfort letter request from banks, lenders, landlords, and the like as a hand grenade rolled into your office with the pin still in place. You need to roll it back out without disengaging the pin. You will need to respond to a comfort letter request to the satisfaction of the user and your client, but also without exposing yourself to professional liability risk. This takes know-how. An attorney familiar with professional negligence can quickly assess whether a potential response goes too far and, if so, how to hem it in.

Engagement letters – These are the most important documents that practitioners will prepare in the course of client relationships. A CPA without an engagement letter is like a pilot without a flight plan – your journey has no end. Engagement letters must be drafted with care and not without specialized knowledge. Also, engagement letters provide an opportunity for counsel to include beneficial terms that might not occur to you; terms that need to be drafted with care to be enforceable. An attorney familiar with professional care can help you ensure that you have on hand a suite of appropriate engagement letters. If you find yourself servicing clients without them, for any type of engagement, run, don’t walk, to the phone and call your attorney or your professional liability insurance company.

Client termination – The other side of the engagement letter coin is disengagement. The decision to fire a client is fraught with complications, and well worth thinking through carefully. When you’re done, you want to be done. A carefully drafted disengagement letter accomplishes this objective by closing the door firmly, but with tact.

Conflicts of interest – Conflicts of interest are among the most common professional hygiene problems. They are present in every marital divorce, business divorce, and in many estate plans and business transactions. Knowing the rules and how to work through them can help you retain business, reduce stress, get paid for your work, and otherwise avoid trouble.

Collection of unpaid fees – CPAs tend to be very good at managing their accounts receivable, but chasing fees will always be part of a practice. Your efforts, though, can backfire if you thoughtlessly pursue collection. Depending upon the circumstances, you may encounter a complex web of debt collection regulations, and you do not want to become unwittingly ensnared in those. Countersuits are all too common.

Discovery of evidence of fraud – When you find yourself in this most challenging of scenarios, prompt and sure action is absolutely required. Seek guidance from your insurance company or from counsel without delay.

Lost/stolen laptop or victim of hacking – Data breaches are becoming more common. They can trigger the need for a fast-moving and wide-ranging response that complies with the laws of however many states’ citizens may be affected – or they may trigger no response at all. Your insurance carrier or counsel will have the answer. Ransomware – where your computer system has been hijacked and will not be “released” unless some condition is met – is a different kind of cyber nightmare. Should you be a victim, contact the local police and your counsel immediately.

Successor CPA requests for access to your records – This is a common event, and it can be a common source of aggravation. It shouldn’t be, though. There is a right way and a wrong way to handle requests for records – largely driven by Pennsylvania statute, but also with reference to the Code of Ethics. It is best to act with the clarity and confidence that comes from knowing you are handling a situation, especially an uncomfortable situation, properly.

Discovery of an error in a prior year’s tax return that you prepared – Errors are occasionally made in the course of tax return preparation. When they surface, a dispassionate, clear-eyed, and prompt remediation plan is essential. Consult with counsel to identify and understand your options, the interplay with your insurance coverage, and the proper way to communicate the situation to your client so as not to potentially compromise your insurance coverage. In doing so, you will ideally maintain a healthy and sustainable client relationship – arguably enjoying an even stronger bond, having been inoculated with a dose of adversity. 

Jonathan S. Ziss, JD, is a partner with Goldberg Segalla in Philadelphia. He can be reached at
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