In the Miami business community, the stakes can be extremely high when allegations of wrongdoing are asserted by one company against another. A single lawsuit can raise the specter of damages running into the millions, which can not only impact a business's bottom line, but its very ability to stay afloat and continue its operations.
These high stakes were made clear this week in a Florida lawsuit brought against auditing firm PwC by a trust. The trust alleged that, due to PwC's gross negligence, the firm had failed to detect fraud when it audited Colonial BancGroup. PwC, meanwhile, claimed that the undetected fraud was the result of collusion. The lawsuit sought $5.5 billion, which represented the largest ever demand against an auditing company.
The lawsuit was recently settled for an undisclosed amount. The settlement followed PwC's payments of $65 million to settle similar claims last year in another matter.
The case illustrates how high the stakes can be when liability for a business tort or other allegation is at issue. It also confirms that settlement may be an effective option to resolve business disputes, no matter how high the stakes may be in a particular case.
There are multiple considerations that should be made when deciding whether it is in the best interests of a company to settle an ongoing dispute. The strengths and weaknesses of the case need to be evaluated, including an honest assessment of how a judge or jury is likely to rule on the case in the event it proceeds to trial. This also entails a consideration of the evidence available in the case and how the evidence can serve to the benefit or detriment of both parties.
Companies also need to have a solid handle on what a case may be worth. Simply because a jury may find liability, for instance, does not mean it will award a high amount of damages. Accordingly, by being armed with the right knowledge and preparation, companies can determine whether it is in their best interest to settle the case and move on or continue fighting until trial or an appeal.
Source: Miami Herald, "$5.5 billion lawsuit against PwC, the largest ever, settled in Miami court," Chabeli Herrera, Aug. 26, 2016