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By Philip Zimmerman, CPA

For those CPAs who want to increase their knowledge of mediation and arbitration, in order to use these alternative dispute resolution (ADR) techniques in their own practice, there is hardly a better way than by attending the annual American Law Institute/American Bar Association's two day program held during even years in New York. Many CPAs see these ADR techniques as a way to avoid costly litigation by making them part of their client engagement letters and partnership agreements. These CPA advocates of ADR also offer ADR consulting as a billable service to their clients

The December 1996 conference was chaired by Stephen A. Hochman, Esq. of New York. ADR practitioners came from eight states and included such diverse organizations as major U.S. corporations and law firms, various governmental agencies, Price Waterhouse, and the Archdiocese of New York.


The most important news for CPAs concerning mediation, which is rapidly growing as the first line of defense against litigation of disputes, was the report of Deborah Masucci, Esq., vice president, Dispute Resolution for the NASD, concerning the results of their mediation program's first two years. Over 900 cases were completed and the success rate was 86%, which is in line with mediation generally and with the experience for claims against CPAs as reported by one of the leading CPA professional liability insurers. This high success rate is especially significant because mediation is voluntary, and all parties need to be satisfied with the result. Otherwise there is no settlement. Mediation has become so important to the legal profession that the American Bar Association's journal referred to it as a "sleeping giant" and urged members to learn more about it and include it in their practices.


The similarly important news for CPAs concerning arbitration was how arbitration rules such as the American Arbitration Association's (AAA) relatively new Rules for Professional and Related Service Disputes can be customized to better fit the needs of individual CPA firm's practices. The client engagement letter used by a Big Six firm, which about a year ago, required the use of an ADR clause in each of its engagement letters was analyzed by Mr. Hochman. Mr. Hochman noted that the letter provided that any controversy or claim arising out of or relating to services covered by this letter shall be submitted first to voluntary mediation, and if mediation is not successful, then to binding arbitration under the previously mentioned AAA rules.

I recommend that CPAs attend such future conferences or watch for other opportunities to learn of practical applications of ADR. One such special shorter program will be offered by the NYSSCPA Arbitration and Mediation Committee through the Foundation for Accounting Education at its 1997 Accounting Show. *

Philip Zimmerman, formerly managing partner of Paneth, Haber & Zimmerman LLP, is a self-employed consultant. He is both a mediator and arbitrator with the American Arbitration Association and the New York State Society of CPAs. Mr. Zimmerman is a frequent writer and speaker on the use of mediation and arbitration in the accounting profession.

The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

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