long-held partnership structure, to limit their liability to claims of negligence made against them.

An industry task force, chaired by Mr. Robert Steinhoff, partner at Butterfield & Steinhoff/KPMG Peat Marwick, is involved in long term talks with the Bermuda Government on this issue.

Meanwhile, an experimental UK programme toward achieving such an aim is being followed with close scrutiny by accounting professionals in many countries.

KPMG, one of the UK's largest firms of chartered accountants, has already announced this month that they will create a British limited liability company to audit some of its leading clients.

In the UK, the "Big Six'' accounting firms, which include KPMG, have collectively faced mushrooming litigation costs, and are all looking seriously at incorporation.

In the US, accountants are also looking at better ways to protect their personal assets. Since August, all six major firms in the US, practice in limited liability partnerships.

Finance Minister the Hon. Grant Gibbons said: "I think that this is an important issue for accounting firms around the world and locally.

"There are about $30 billion in damage claims currently outstanding against accounting firms. The situation locally is reasonably serious as well.

"Given the fact that a lot of our business here for accounting firms is CAs look at limited liability considered to be risky business, there is a liability of claim hanging over the local accounting community as well.

"There may be future consideration of amendments to the Companies Act or legislation governing professional accountants.'' President of the Institute of Chartered Accountants of Bermuda, Mr. Anthony Joaquin, said that on a worldwide basis, the accounting profession is looking at the question of limitation of legal liability. It has been driven in part by the huge jury award settlements against accounting firms in the US in recent years.

"This,'' said Mr. Joaquin, "does not deal with cases of fraud or wilful neglect. This only deals with negligence claims.

"If you are at fault, then you are at fault totally and you should pay. This is only dealing in the main with negligence where one has deemed to have made a mistake.'' It was litigation that drove the once powerful and prominent US accounting firm, Laventhol & Horwath, into bankruptcy, sending shock waves and a wake up call to accountants.

The unlimited partnership structure, long embraced by accountants, is being seen as a relic of the days when jury awards weren't so high and people were not so ready to sue their accountants. Equally, there was no such widespread involvement in an increasingly sophisticated marketplace, with business products that are so intricately engineered.

Said Mr. Joaquin: "The underlying premise of the partnership structure is that the firm and the partners are subject to unlimited liability. The debts of the partnership can be satisfied not just by the assets of the partnership alone, but also by the assets of the individual partners.

"And with the rising tide of litigation, a plaintiff's lawyers could bring anyone into the lawsuit with any connection whatsoever, to try to cover as many areas of potential assets as possible.

"If a lawyer wins a case against four people for $50 million, having proven person `A' to be 80 percent culpable, the other three people sharing the other 20 percent culpability still have to pay the $50 million if `A' is penniless.

If they have the money, they have to pay, regardless of their level of culpability. That is the concept of joint several liability.

"That has given rise to a movement by accounting firms worldwide to try to limit that liability. It is a sign of the times, a sign of an increasingly litigious environment, worldwide.'' A virtual worldwide movement among accountants is today on two fronts. The first is to restructure the firms in corporate vehicles that are other than partnerships, which allow for some limitation of liability.

Said Mr. Joaquin: "If you sue me for $500 million and your lawyer also brings the suit against four other people, and the assets of my firm is $500 million and I'm found to be only 10 percent liable, while the other guys have no money, I still lose the assets of my firm to the amount of $500 million.

"All step one does is say that we've restructured in a form that for the most part, the assets of the firm remain at risk, as opposed to all of the assets of the partners.

"It's no different then to what would exist in a corporate environment for a charge like negligence. It still doesn't protect the assets of the firm to the extent of its liability.'' Secondly, on a broader scope, accountants will hope to have amended the legal concept of joint several liability to one of proportional liability.

Said Dr. Gibbons: "This is a problem which is being looked at in the US right now. I think both houses of Congress have passed measures which make proportional liability the preferred route.

"The situation for Bermuda is that we obviously don't want to be way out front on this because as an offshore jurisdiction our credibility is very important. We are watching very closely what is happening in the US and the UK to see how they might proceed.

"At the same time we are discussing it locally, to look at these options.

We're trying to find the most appropriate way to deal with it. It's a question also of balancing off the liability issue and the accountability of the firms themselves.''