Progress towards limiting the personal liability of Bermuda's chartered accountants, and other professionals, has been slow.

Managing partner of Ernst & Young Bermuda Jan Spiering commented: "We do feel that some kind of incorporation of the firms would be helpful.

"Certainly, international liability and liabilities created by international business is the subject of concern within the profession here.

"There has been no specific progress that I'm aware of with regard to forming limited liability corporations recently, but it is something that we are looking at as a profession to address this world wide problem.'' Chairing an industry task force to make this happen is KPMG Peat Marwick Bermuda managing partner, Robert Steinhoff, who said, "Things are taking much slower than I was hoping. We are still in discussions with the Ministry of Finance on the question of accountants and other professionals, such as lawyers, being able to operate either through a limited liability company or a limited liability partnership. But it is still only discussions at this point in time.

"There has been some discussion about getting something done this spring, but there has been no decision on what that will be.'' The discussions are at least three years old and have led to some related changes, but Mr. Steinhoff said that talks had become more active recently, especially regarding the limited liability issues.

He said the laws of Bermuda were materially different from those in other countries that prevents an easy adoption of the desired changes.

In the UK major firms have established limited liability companies to audit some of their leading clients. In the US, all the major firms (the big five) now operate as limited liability partnerships. In Canada, two provinces allow companies to operate as limited liability companies. And Ontario is working on some form of a limited liability partnership. Since accountancy firms suffered huge losses in recent years through court judgments against them, they have become much more concerned about professional risks.

In some cases, they became the `fall-guy' or `deep pockets' for client mistakes, and were forced to pay for those mistakes, even though they had done nothing wrong.

One reaction among UK firms was to cap their liability at three times the value of the fees they received for certain types of high risk business. And they are a lot slower to sign off on work, leading to significant discussions among lawyers and accountants over who is liable for what.

"Historically,'' said Mr. Spiering, "we were seen as the `deep pockets'. We were seen to have an insurance policy, making it an easy way for people to seek compensation for errors that did not come from accountants.

"It didn't matter, because through various court cases, it was adjudicated that we had a role to play. And because we were seen as having the deep pockets, we ended up paying the full bill, in cases where we might have had a shared responsibility, and in cases where we felt we had no responsibility.

"But because we were the only ones with the money, we ended up with the full bill. That result was very inequitable.'' Mr. Steinhoff noted, "We've been the subject of green mail, where accountants were sometimes sued with the intention of getting a settlement, even when the plaintiffs knew there was very little chance of getting a court victory.

"They work on the embarrassment factor. They know that accountants don't want to be seen defending themselves on professional issues and will settle out of court.'' Mr. Spiering added, "Most businesses get to cap their liabilities, and the accounting profession wants to do the same.

"All the accounting firms have some liability companies, but you can't practice as an accounting firm under the current laws as a limited liability company.''