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measurability of the harm ex ante, the variance of the parties' conduct with the reasonable standard of care, and, we would add, the potential gain to each party from the enterprise.(n194)

A comparative fault regime would appear to meet tort law's fairness and deterrence objectives more effectively than one in which contributory negligence is a complete defense. Fairness is achieved because the plaintiff receives full compensation from the culpable tortfeasors less what the plaintiff is deemed to have contributed to her own injury, and each defendant is assessed in proportion to his culpability. At the same time, appropriate levels of deterrence are achieved by proportionate assessment, because to assess defendants a greater share of damages than what they contributed to the plaintiff's injury would over-deter them, while correspondingly under- deterring the other responsible parties.

So long as all responsible parties are joined in the action, the potential for meeting fairness and deterrence objectives is present.(n195) But even if all parties are before the court, a problem arises if a culpable defendant is insolvent or immune from suit. In such a case the plaintiff must either be awarded less than full compensation or culpable defendants must be assessed more damages than the fact finder has determined to be their equitable shares. Under the common law doctrine of joint and several liability, the resolution in favor of full compensation is clear. Whether such a rule is fair and economically efficient in the auditors' cases will be taken up in the following sections.

The Effect and Fairness of Joint and Several Liability in the Auditing Context

When there is a single defendant who is immune from suit or insolvent, the goal of compensation for the victim is frustrated. This result is particularly regrettable when the plaintiff is entirely free of fault, because the entire loss falls on that unlucky, innocent victim.

When there is more than one defendant the possibility exists for shifting the risk of loss from the innocent victim to solvent joint or concurrent tortfeasors. By applying the common law rule of joint and several liability, the plaintiff can recover from any and all defendants found liable for proximately causing the harm. Whether this result is fair is an issue that will be discussed below. Whether it is economically efficient will be considered in the next subsection.

Accountants have focused on the joint and several rule as particularly burdensome because of the high probability that, in cases brought by creditors, guarantors, and investors against defalcating enterprises, the accountants are likely to be the only deep-pocket defendants available to meet the judgment.(n196) In the general case, an insolvent primary defendant is a relatively unusual phenomenon; in the financial failure eases, it is the norm. In the past, the joint and several rule was not an important concern to accountants because, under Ultramares(n197) and the Restatement,(n198) the auditor was completely shielded from liability to unforeseen third parties. In jurisdictions following the foreseeable third party rule of H. Rosenblum v. Adler,(n199) however, the exposure to liability could be virtually unlimited. If accountants' liability to foreseeable third parties is to become the general rule in the United States, surely some middle ground can be found for apportioning losses among the parties.


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