Учебный год 22-23 / viewcontent1
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Commentators and scholars have argued that lawyers should be proactively responsible for preventing these failures, by monitoring accountants or reviewing their determinations. The implicit rationale for proactive monitoring is economic: that lawyers already are intimately involved in business transactions, giving them an advantage (through economies of scope) in monitoring the accounting elements in order to help prevent the information failures.
This article demonstrates, however, that there are strong systemic reasons to believe that any such proactive lawyer-monitoring regime—just like any regime in which non-experts attempt to proactively monitor experts in areas of their expertise182—would be inefficient, doing little (albeit, at great cost) to curb financial information failures. In contrast, this article argues that a more passively responsive, or “reactive,” monitoring regime would be nearly as effective at a much lower cost. Under a reactive monitoring regime, lawyers would be educated to spot warning signs that might signal financial information failures—such as the absence of a valid business purpose for the transaction, or an accounting result that appears manifestly wrong. If a warning sign cannot be dispelled, or if other warning signs emerge, the lawyer should inform the accountant and, in appropriate circumstances, withdraw from the representation.
The article concludes that no form of lawyer monitoring can fully prevent financial information failures.183 More effective solutions are needed to directly address
182See supra notes 94-101, 151-152, and accompanying text (discussing that type of monitoring).
183Professor Cunningham appears to implicitly acknowledge this, observing that “[a]s a technical matter, the duty of competence may not call for a law firm’s involvement in discussing appropriate accounting treatment.” Cunningham, Sharing Accounting’s Burdens, supra note 49, at 1455 (observing the positive-law duty of competence but not suggesting it should change). The practical possibility of there being a “perfect circle of lack of responsibility” also may be mitigated to some extent by the overlap between securities law disclosure and financial disclosure required under GAAP. An investor who observes the disparity between such disclosure could, at least theoretically, inquiry further to learn the truth.
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the failures at their source.184 Lawyer monitoring nonetheless can—and, because it is seen as a social good, inevitably will—complement those solutions, giving critical public import to this article’s inquiry of how lawyers should perform that monitoring.
184 The sources of financial information failures, the article argues, are the firm, its accountants, its investors, and GAAP itself. See supra notes 156-181 and accompanying text (examining solutions that address these sources of information failure).