Sometimes the client-accountant relationship evolves over time due to fickle fortune, changes in business or other reasons. When it does, accountants must recognize it in order to continue to help these clients achieve financial security, minimize legal risks and avoid potential liability claims.
As the saying goes, “There is no friend like an old friend.” The same may be true in your professional life, as long-standing client relationships are often the most satisfying. They reinforce what it means to truly be a professional, guiding and advising clients across the arc of their working lives and, ideally, seeing them achieve financial security and peace of mind.
While this is a common enough scenario, it is by no means inevitable. Over time, the accountant-client dynamic evolves, whether due to advancing age, fickle fortune or changes in the family or the business, to name a few. It is in these changes that the risk of professional liability lurks. Change is not intrinsically bad, of course, but when it is not recognized, the practitioner risks losing contact. By clinging to what was, rather than addressing what is, you will not be able to help the client plan for what shall be.
According to data gathered by professional liability insurance carriers, practitioners are statistically at a higher risk of claims being asserted by the clients with whom they have worked the longest. No friend like an old friend, indeed.
The following examples are based on real-life situations, gathered from decades of professional liability claims. (The names and businesses have all been changed.)
Swimming in New Waters
For decades, Bill Often, CPA, handled tax compliance for his client Precious Properties LP and its general partner, Mr. Grant Land. Land pursued deal after deal over the years, cleverly spotting real estate development opportunities and almost always coming out ahead. For each new tax year, Bill’s firm issued a standard engagement letter that contemplated end-of-year planning and preparation of returns.
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