Uncertainty, Complexity, Liability, and Cost - Yep, Trial Lawyers
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As promised, on August 8th the Chamber voiced strong opposition to proposed accounting rule changes that would open the door to lawsuit abuse by trial lawyers and would not provide clear or useful new information to investors.
In a letter to the Financial Accounting Standards Board (FASB), the Chamber outlined its objections to proposed amendments to Statement of Financial Accounting Standard No. 5 (FAS 5), "Accounting for Contingencies," which would significantly increase the amount of information publicly traded companies are required to disclose regarding pending or threatened litigation. These additional requirements would force companies to release immaterial or confidential information—likely resulting in excessive or harassing lawsuits filed by plaintiffs' trial attorneys.
Under the current standard, companies are required to disclose loss contingencies for "probable losses." The proposed amendments would substantially expand current standard, requiring companies to disclose all contingencies unless the chance of loss is "remote." In addition the proposed changes would lead to the erosion of attorney-client and work product privileges by requiring companies to reveal analysis and strategy regarding pending or potential future litigation.