Negligent Accounting and the Limits of Instrumental Tort Reform

This article first explores the relationship between the accountant and the reliant third party, and recounts the mounting judicial hostility to the accountant’s traditional privity defense. Next, the article critically examines the arguments that have supported traditional privity-based regimes. The third section turns to the reform courts and tests whether the rationales offered for reform justify abandoning the privity requirement.

Concluding that a convincing case for reform has yet to be made and – given the complexity of a properly executed instrumental analysis – may never be made, the article’s final section reconsiders the utility of instrumental reasoning as a self-sustaining basis for tort reform. It suggests that, if the negligent accounting cases are any indication, the viability of tort reforms based on instrumental rationales may ultimately depend on how well the outcome in such cases corresponds to more traditional notions of fairness between the parties. In situations where this subtext of fairness concerns yields no obvious answer, the analysis suggests that courts armed with an instrumental agenda should proceed with considerably more caution than they currently exercise.