Forensic Accountants & Expert Witness Insurance
Financial investigations, litigation support, expert reports and dispute-related accounting all happen in an adversarial setting. Every opinion a forensic accountant gives is tested by someone with a strong interest in proving it wrong, and the stakes are whatever the dispute is worth.
Until 2011 an expert witness had immunity from being sued by their own client over evidence given in proceedings. The Supreme Court removed that in Jones v Kaney, so an expert can now face a negligence claim from the party that instructed them, for example where an expert's change of position in a joint statement damaged the client's case. That decision is the reason expert witness work is now underwritten as a professional indemnity exposure in its own right.
The duty runs in two directions. Under Part 35 of the Civil Procedure Rules an expert's overriding duty is to help the court on matters within their expertise, and that duty overrides any obligation to the party paying the fee. An expert who keeps to that duty may disappoint the client, and one who does not may face criticism from the court, a costs order or referral to their professional body.
We can advise forensic accounting practices, individual expert witnesses and investigation firms on professional indemnity that reflects court work, internal investigations and the reputational exposure of reports that name individuals.
Common claims and risk exposures
The exposures that produce claims in this trade, rather than a generic list.
Negligent expert evidence
A calculation error in a loss of profits report, a methodology that does not survive cross examination, or a concession in a joint statement that the client says was unnecessary. Since Jones v Kaney the instructing party can bring a claim, and the loss alleged is the case value lost or reduced.
Costs orders and judicial criticism
Courts have power to make costs orders against an expert whose conduct in the proceedings causes significant wasted expense, for example through flagrant disregard of their duties. Even without a costs order, adverse comments in a judgment can lead to complaints and claims.
Investigation reports naming individuals
An internal fraud investigation or a regulatory report that identifies an employee, director or third party. If the findings are wrong or overstated, the person named may allege defamation, malicious falsehood or breach of data protection rights.
Asset tracing and quantum work
Tracing funds in fraud or matrimonial cases, valuing businesses in shareholder disputes, quantifying insurance or business interruption losses. Errors may lead to assets being missed, a settlement reached on the wrong figure, or a client pursuing the wrong party.
Conflicts of interest
A firm that has previously acted for the other side, or whose wider practice audits a party to the dispute. A conflict discovered late can force withdrawal mid-case, wasting the client's costs and inviting a claim for them.
The cover we arrange
We arrange professional indemnity and related insurance around the services you provide, the clients you work with and the contractual requirements you face. The appropriate cover and limits will depend on your individual activities and the terms available from insurers.
Professional indemnity
Claims alleging negligence in forensic accounting, investigation and expert witness work, including claims by the instructing party following Jones v Kaney. The policy should name expert witness work as a declared activity.
- Expert reports and oral evidence
- Investigations and litigation support
- Claims by instructing parties
- Defence costs
Defamation and data claims
Cover for allegations arising from the content of reports, such as defamation or breach of confidence. Many professional indemnity wordings include this, but it is worth confirming where reports routinely name individuals.
- Defamation and malicious falsehood
- Breach of confidence
- Data protection claims
- Subject to policy terms
Costs orders and disciplinary proceedings
The cost of responding to an application for a costs order against the expert, or to a professional body complaint following judicial criticism. Whether a costs order itself is covered depends on the wording and the circumstances.
- Responding to costs applications
- Professional body complaints
- Legal representation
- Read the wording carefully
Cyber and data
Disclosure bundles, bank records, privileged material and personal data from both sides of a dispute. A breach involving litigation material creates notification obligations and may compromise the proceedings themselves.
- Litigation data breach
- Privileged material
- Notification costs
- System restoration
Office and liability
Premises, equipment and public liability for clients and solicitors attending meetings. Employers' liability can be arranged where required, subject to the policy terms, and is legally required once the firm employs staff.
- Office contents and equipment
- Public liability
- Employers' liability where required
- Document reconstitution
What an underwriter will ask
Having these to hand shortens the process considerably, and usually improves the terms.
- Fee income split between expert witness work, investigations, litigation support and other accounting services
- Types of dispute: commercial, matrimonial, personal injury, insurance, criminal or regulatory
- Typical and largest amount in dispute on a single instruction
- Whether the firm acts as single joint expert as well as party appointed expert
- Conflict checking procedures, particularly where the wider firm has audit or advisory clients
- Training in Part 35 duties and report writing for those giving evidence
- How investigation reports naming individuals are reviewed before release
- Claims, costs applications and judicial criticism over the last six years
What affects the cost of your insurance?
The main factors insurers consider when assessing the premium.
Size of the disputes
The limit a firm needs follows the value of the cases it works on. An expert on high value commercial arbitrations needs a different limit from one giving evidence on modest personal injury loss claims.
Proportion of expert witness work
Insurers look at how much of the firm's income comes from contentious work, since that is where claims from instructing parties and costs applications arise.
Quality controls
Second partner review of reports, documented conflict checks and Part 35 training are the controls insurers ask about, and evidence of them supports better terms.
Conditions and exclusions to consider
Terms vary between insurers, so treat these as the questions to ask rather than a description of any one policy.
Fines and sanctions
Penalties for contempt or regulatory fines are generally uninsurable. A false statement of truth can amount to contempt of court, and no policy will answer for that.
Undeclared activities
An accountancy policy that does not mention expert witness work may not respond to a claim arising from it. Firms that have moved into forensic work over time should check their proposal reflects it.
Outcome guarantees and conditional fees
Experts should not accept fees contingent on the outcome of the case, and an expert who has done so faces both a credibility problem and possible difficulty with cover for any resulting claim.
Dishonesty
Deliberately misleading evidence is excluded for the individual responsible. Innocent partners in the firm are usually protected, subject to the policy terms.
Common questions
Can I be sued by the party that instructed me?
Yes. Since Jones v Kaney in 2011, expert witnesses in England and Wales no longer have immunity from negligence claims brought by their own client in respect of their evidence. Immunity from claims by the opposing party is a separate question, but your own client can now sue.
What does my duty to the court under CPR Part 35 mean in practice?
Your overriding duty is to help the court on matters within your expertise, and it takes priority over any obligation to the party instructing or paying you. Your evidence should be independent and objective, and you should state where an issue falls outside your expertise.
Does professional indemnity cover a costs order made against me?
It depends on the wording and how the order arose. Many policies will cover the cost of defending an application, while cover for the order itself varies. If court work is a significant part of your practice, this is worth checking specifically.
Are investigation reports covered if someone named in them sues?
Many professional indemnity policies include defamation and breach of confidence, but limits and conditions vary. If your reports regularly identify employees or directors, confirm the cover rather than assuming it.
I give expert evidence occasionally alongside my accountancy work. Do I need separate cover?
Not necessarily separate, but it should be declared. An insurer that believes it is covering compliance accounting may not expect claims from expert evidence in a high value dispute, so the proposal should describe the work accurately.
How do I get a quote from True Risk Solutions?
Call 01304 262880 and speak to a broker, or email info@truerisksolutions.co.uk with what you do, what you need cover for and a phone number with the best time to call, and a broker will call you back. We need a phone number to quote, because the cover and the price depend on questions that are quicker to answer on a call than by email.
Speak to a specialist who understands your industry
Tell us about your business and the work you undertake, and we will come back to you with cover options built around it. Call 01304 262880, or email us with a phone number and the best time to call and a broker will ring you back.