Abstract
Recent progress in the United States toward a new standard of allocating the payment of damages in lawsuits against professionals according to their degree of proportionate fault should encourage similar reforms in other nations. This paper documents that a system based upon joint and several liability coerces settlements from so-called deep-pocket defendants with little regard to the merits of the underlying claim. Besides threatening the viability of accounting firms, joint and several liability ultimately harms investors by restricting existing and potential audit services and by deterring qualified individuals from serving on corporate boards. Early reviews of the U.S. reforms and the recent defeat of an initiative that would have undermined the federal law indicate that proportionate liability is effective in discouraging abusive litigation and protecting the largest number of investors.
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