THE SIMPLE CAUSE OF FINANCIAL DISPUTES

As forensic accountants we spend our time unpicking financial disputes in order to reach a satisfactory outcome. The question is why do the financial disputes arise and why do they sometimes take months or years to resolve?

There is no doubt that arguments involving claims for losses or misappropriation of assets can be expensive, involving the professional services of lawyers and forensic accountants. In addition to taking lengthy periods of protracted and stressful negotiations, dealing with such disputes can be very heavy on the pocket.

The Decision To Make A Claim

Before you decide to involve expensive professionals, it is a good idea to examine the cost effectiveness of taking action. The cost of litigation must be weighed against the amount you stand to recover and of course the likelihood of any recovery at all. Often the best course of action is not to embark on lengthy legal action, but to swallow the loss and expend all your energy and resources on developing your business.

This is a very hard decision to make, and often the cause of a financial dispute is the anger you feel at being compomised by another person or entity. For example, a supplier has failed to delivery an order that was contracted for a certain date in order that you could meet your own contractual obligation. You are faced with substantial penalties for late delivery, but do not have any similar recourse to your supplier.

There are a number of factors at play that will decide how any financial dispute will develop. These might include:

  1. How large is the penalty you face?
  2. Can the penalty be reduced if you pull out all the stops to deliver?
  3. Can you afford the time to pursue your supplier?
  4. Is your business strong enough to support litigation or arbitration?
  5. How much recompense could you hope to obtain from your supplier?
  6. Can the supplier make up for the problem they caused?

Every financial dispute is different, but most are driven by anger and a sense of being wronged, even though every case has two points of view!

Most Financial Disputes Can Be Avoided

As a forensic accountant, I have cause to review case papers on a regular basis. Over the years I have read the case correspondence between clients and their legal advisors on both side of commercial and criminal disputes. The nature of a dispute is that it involves argument, and a client is always supported by their lawyer who natrually becomes a party to the intense acrimony that can develop. There is a tendancy for disputes to escalate, and I have often observed cases that start out with the best intentions of a quick settlement ending up as a battlefield! As an example I provided services in recent months as a jointly court appointed expert in a dispute between siblings over an inheritance where the sum of money in issue ended up being less than half the amount of the final combined professional fees.

A forensic accountant appointed as an expert accountant has a different role to a client’s lawyer. A lawyer is chasing the best outcome for their client of course, but this is sometimes interpreted as winning at any cost. An accountant is appointed as an independant expert, and cannot be partisan. The value of any accounting investigation is that it unpicks the complex financial dispute, presenting the issues that are supported by facts in a clear and concise way such that the matter can be understood by both parties and a solution agreed. This is why an expert accountant is often appointed by the court to act jointly for both parties.

We Are Happy To Help – If Needed

Although at Mark Jenner & Co Limited we are running a commercial forensic accounting practice seeking to make healthy profits, we view the financial dispute resolution marketplace as one that needs great care and should not be entered by a claimant without first looking at all the options. For example, I was approached by a lady recently to examine and present her case against a husband who had diverted the matrimonial assets to a girlfriend. In this case it was easy for the lady to obtain the evidence of wrongdoing for herself from the joint bank account and present her position to the husband who relented and settled fairly without the need for additional professional help. The potential client had just needed reassurance, that I was able to give over the telephone without costing her anything.

About Mark Jenner

Mark Jenner is an experienced forensic accountant specialising in fraud and white collar criminal matters. He provides independent financial investigation and expert accounting witness services to police forces, fraud regulators and criminal defence lawyers, also providing assistance and solutions to organisations embroiled in financial disputes.

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