Lawsuits inhibit industry. (Phoenix, Arizona's accounting firms) (Focus on Accounting) (Industry Overview)

Valley's top accountants decry 'deep pockets' mentality in liability suits

Capital formation, business expansion and job growth are being stymied by an ever-increasing number of lawsuits filed against accountants, say the heads of several Valley accounting firms. They say that, unless a concerted effort is made soon to reform the tort liability system, capital markets and the competitiveness of the state and national economies could suffer dramatically.

"Litigation is threatening business as we know it," says Jack Henry, managing partner of Arthur Andersen & Co. Henry says both legitimate and frivolous suits are creating a "hidden tax" on the economy, raising costs for companies and consumers alike.

More importantly, Henry says, the situation is forcing many accountants to reconsider their offering of auditing services. He says frivolous class-action suits -- and inappropriately applied racketeering charges in particular -- …