George J. (“Jay”) Coleman, III is a Phoenix, Arizona litigator with over 35 years of experience representing businesses (large and small) and individuals from Arizona and other states in all forms of business litigation and dispute resolution.  Among his specialties are matters involving allegations of securities and business fraud; representation of accountants, lawyers, real estate and other professionals in malpractice litigation and regulatory proceedings; franchising, partnership and contract disputes; and failures of software and information technology systems.  He also reviews contracts and advises clients on risk management and loss prevention issues in order to help them avoid litigation in the first place.

Jay has successfully handled virtually every type of commercial litigation and has been recognized by both his clients and the lawyers he has gone up against over the years as one of the “Best Lawyers in America” and one of “Arizona’s Finest Lawyers.”  While he has a proven track record of success in the courtroom and before arbitration panels, and is more than ready to shepherd his clients thorough the litigation process and tenaciously represent their interests, he also keeps in mind his clients’ business objectives and recognizes the need, where possible, to efficiently and quickly resolve disputes at minimal expense short of full-blown litigation.  Whether defending a national Big Four accounting firm’s audit work before a jury, or helping a small businessman resolve his contract dispute, Jay is hard-working, thorough, innovative, prepared, and loyal to his clients.

A litigation partner with the Southwest’s largest (and one of the nation’s largest) law firms for three decades, he joined Salmon, Lewis & Weldon, P.L.C. in 2015.  He is uniquely positioned to deliver big firm expertise with a small firm’s personalized attention and rate flexibility.

Representative Professional Experience

• Defended Big Four and local accounting firms in numerous multi-million dollar audit, tax, valuation, ERISA, and consulting malpractice cases, as well as securities fraud litigation, in state and federal courts in Arizona, New Mexico, Texas and California, and before arbitration panels, as well as in investigations and proceedings before State Accountancy Boards, the AICPA and the SEC.  Also handles more routine matters such as subpoenas, disengagements and practice management/loss prevention advice.  See Appendix detailing this extensive accountant’s liability experience.
• Defended many law firms in malpractice litigation, including:
  • New York law firm against $2.4 million malpractice claim arising out of handling of Connecticut litigation
    Arizona law firm against $3.2 million claim for malpractice, breaches of fiduciary duty, and fraud arising from managing attorney’s misappropriation of client funds
  • Washington, DC, office of Am Law 100 law firm against $4.5 million claim for tax malpractice and attorney self-dealing/conflict of interest
• Represented commercial real estate brokerage in obtaining disputed commission from developer of biomedical facility
• Defended regional bank in $15 million litigation over its sale on secondary market to Wall Street investment bank of 60 “Alt A” mortgage loans originated in 14 states for securitization and sale to investors; one of the first cases filed in the country over the “subprime mortgage crisis”
• Defended information technology firm against $246 million negligence and fraud claims arising out of implementation of national big box retail chain’s enterprise-wide SAP computer system
• Defended Seattle medical equipment manufacturer in litigation brought by its Arizona, West Texas, New Mexico and Maryland dealers over scope of territorial and exclusivity clauses
• Defended real estate developer, a successful bidder in municipality’s first Internet land auction, against losing bidders’ attempts to void auction on grounds of fraud and collusion
• Defended forensic consultants against apartment owner’s claims that they aided and abetted insurer’s bad faith when analyzing lost business income from fire loss
• Represented Illinois and Oregon printing companies in litigation with their Arizona business software supplier over terms of license agreements and software that did not perform
• Represented Wisconsin medical billing and collection agency against claims by Arizona physicians group that it failed to bill or under-collected $9.4 million worth of patient accounts
• Represented Texas company in dispute over its acquisition of Arizona property management company
• Represented public utility in various territorial disputes with irrigation and electrical districts
• Defended North Carolina company against claims by Arizona competitor that it misappropriated trade secrets and violated non-compete clause

Representative Speaking & Publications

• Frequent author and speaker on accountant liability issues for various insurance carriers, the AICPA, the Arizona Society of CPAs, the Arizona State Bar, the American Bar Association, CPA Connect, and the Federal Tax Institute.  See Appendix for details.
• Computer Disasters: Lessons Learned in Getting the Facts Before the Court, Faculty, International IT Law Conference (June 9-10, 2005)
• Litigating Equity Skimming Cases on Behalf of Homeowners, Author and Speaker, Arizona State Bar Convention (June 2006)
• AICPA Expert Witness Skills Workshop, Faculty (January 24-26, 2013)

Honors & Awards

• The Best Lawyers in America, Commercial Litigation
• Southwest Super Lawyers, General Litigation
• Arizona’s Finest Lawyers
• AV Preeminent Rated Lawyer by Martindale-Hubbell
• Top Attorneys in the Southwest
• Top Lawyers of Arizona
• Top Pro Bono Attorney of the Year, Arizona Foundation for Legal Services & Education (2006)

Professional & Civic Activities

• Phoenix Art Museum, Men’s Arts Council

Other Professional Experience

• Served two five-year appointments to the Law Review Advisory Committee of the Arizona State Board of Accountancy, which rewrote the Arizona statutes and regulations governing the accounting profession, culminating in revised A.R.S. § 32-701 et seq. (2009-2019)
• Arizona Court of Appeals, Law Clerk to Hon. William E. Eubank (1983-1984)

Appendix Re Accountant’s Liability Experience

Representation of Big Four and Other National Accounting Firms

• Defended firm’s actuarial and pension plan consultants against law firm’s $4 million ERISA malpractice claim arising out of merger of defined benefit plan into defined contribution plan. After 24 fact and expert depositions, won contentious discovery dispute to obtain documents suggesting that statute of limitations had run. Used those documents to prepare summary judgment arguments, which were used with mediator to leverage an advantageous settlement. (2008-2013)
• Defended audit malpractice claim brought by Receiver for failed health insurance company alleging that, had auditors issued a going concern opinion and/or an NAIC notice of adverse condition, insurance regulators would have stepped in sooner and prevented a $40 million plus deepening insolvency. Thirty-eight fact witness depositions and eight expert witnesses. After a three-week arbitration, the AAA Panel returned a complete defense Award. (2007-2009)
• Defended firm’s MAS consultants against $246 million plus punitives claim arising out of implementation of a large national big box retail chain’s enterprise-wide SAP computer system. Plaintiff alleged not only negligence but also that it was fraudulently induced to hire the firm which, despite its marketing literature, allegedly knew that it did not have sufficient staff and expertise to install the computer system. After three years of contentious litigation, including a failed mediation, the production of millions of pages of electronic and hard copy documents, numerous discovery disputes (including pioneering e-discovery issues), more than 40 fact witness depositions, working with more than half a dozen experts, and briefing and arguing 13 motions for summary judgment, the vast majority of the plaintiffs’ claims were dismissed on summary judgment. The case then settled at mediation on favorable terms. (2002-2005)
• Defended various lawsuits and regulatory matters with a $35-60 million exposure arising out of the audits of a Tucson-based insurance holding group that was a victim of massive management fraud. (1995-2002)
  • Defended auditors in depositions before the SEC, which ultimately filed a civil action against management but concluded that the auditors did no wrong.
  • Defended Arizona state court audit malpractice litigation brought by management of the holding company. Negotiated a settlement with the insurance subsidiary and used that settlement as a partial bar to the holding company’s action. Case then settled on favorable terms.
  • Defended federal court securities fraud class action brought by investors. After extensive deposition and motion practice received a favorable partial summary judgment ruling and then won an arbitration before retired Federal Judge Lawrence Irving in San Diego.
  • Defended an investigation by the Arizona State Board of Accountancy, which did not take adverse action.
  • Defended an investigation by the AICPA, which did not take adverse action.
• Served as local counsel in Rule 102(e) proceedings against audit partner and manager and in their lawsuit to enjoin the SEC from maintaining that proceeding. (1999-2000)
• Defended $14.5 million (plus trebles and punitives) audit malpractice case in state court in Fort Worth, Texas arising out of losses in bank’s mortgage warehousing program. Spent a substantial amount of time in Fort Worth over three years. The plaintiff bank was affiliated with the Bass Brothers and represented by Steve Susman of Susman Godfrey. Over 25 depositions were taken and many motions (including Cenco imputation issues and the viability of the “audit interference” rule in Texas) were argued. Obtained a favorable settlement at mediation. (1995-1997)
• Defended and settled tax malpractice lawsuit in Arizona state court arising out of an IRS audit of a law firm. (1995)
• Won motion to dismiss tax malpractice claim in New Mexico state court. (1994)
• Defended Arizona state court action filed on behalf of lender arising out of firm’s audits of MiniScribe (the bricks in the inventory client), which was eventually transferred to Colorado where other counsel took over. (1990-1993)
• Defense of audit malpractice claim where firm refused to give a clean opinion unless management reversed previously recognized income from sale/leaseback of hydroponic greenhouses. Company reversed the income and showed a loss on its 10-K, could not obtain financing, filed for bankruptcy and sued auditors in Arizona state court seeking $56 million in lost profits, primarily from sale of greenhouse ranges in the Middle East. Over 50 depositions taken. Won partial summary judgment (arguing that the auditor’s duty to the public under Arthur Young transcends its duty to the client, and that, since financial statements are the client’s representations, the client caused its own damages by choosing to disseminate its statements) in 1987 and then a directed verdict on the remaining claims at trial in 1988, which rulings were reversed on appeal (despite the AICPA submitting an amicus brief supporting our position). Upon retrial in 1993 won a defense verdict. (1985-1993)
• Handled numerous smaller matters such as responding to third-party document and deposition subpoenas and where necessary negotiating and litigating associated protective orders, reviewing and producing documents, and defending depositions.

Representation of Local Accounting Firms

Over the years have represented many local accounting firms on over one hundred matters ranging from the defense of audit, tax, consulting and valuation malpractice claims, and handling inquiries from and investigations by the AICPA and the State Board of Accountancy, to complying with and where necessary contesting subpoenas, advising on engagement letters and disengaging, and otherwise advising on practice management and loss prevention issues. Representative matters include:

• Defended firm and individual tax accountants against wife’s claims of malpractice and breaches of fiduciary duty arising out of their preparation of divorcing high net-worth couple’s married filing separate tax returns. Won dismissal of individual accountants and summary judgment for firm. (2017-2019)
• Obtained summary dismissal from State Board of medical marijuana company’s complaint against tax CPA where client failed to timely provide information necessary to prepare returns. (2018)
• Defended firm against client’s claim that tax position taken on its business retreat property, for which IRS assessed over $200,000, was negligently structured. Settled matter on favorable terms. (2017)
• Obtained summary dismissal from State Board of client’s complaint against audit firm for recalling audit reports pursuant to AU § 561 after learning post-issuance of client’s regulatory violations and mischaracterization of funds. (2016-2017)
• Defended in-house accountant for real estate developer’s various entities and trust against $11 million claim by trust beneficiary for aiding and abetting developer’s alleged breaches of fiduciary duty. Won summary judgment on statute of limitations. (2015-2017)
• Negotiated Consent Order with State Board for CPA whose individual and firm certificates were suspended for failure to meet CPE requirements. (2016)
• Defended firm that provided tax and bookkeeping services against long-standing client’s claim for failure to detect $1 million embezzlement by CFO. After developing case for client’s own comparative fault, settled matter on favorable terms. (2015-2016)
• Obtained dismissal from State Board of Assistant Attorney General’s complaint against Utah CPA firm for alleged deficiencies in its Arizona office’s audit of school district’s procurement practices. (2015-2016)
• Obtained dismissal from State Board of client’s complaint against tax CPA who refused to take return position that client’s litigation settlement proceeds were non-taxable. (2015)
• Defended forensic auditors in AICPA and HUD investigation of their audit of misuse of funds by Indian tribe’s housing authority. (2012–2015)
• Defended auditors against various securities fraud lawsuits filed by client and investors over failure to detect Ponzi scheme. Won partial motions to dismiss and then obtained summary judgments on remaining claims. (2009-2013)
• Defended tax accountant against civil claims for malpractice, negligent misrepresentation, and breach of fiduciary duty brought by high net-worth clients over their participation in massive tax shelter (one client sheltered $140 million in one year alone) that IRS, in the largest tax shelter case in its history, disallowed. (2005-2012)
• Defended tax accountant who gave erroneous advice on capital gain treatment of client’s sale of Preakness-winning thoroughbred racehorse. Conceding liability but arguing reliance and causation, obtained successful result at mediation. (2011)
• Defended tax accountants against client’s claims that firm was responsible for six years of tardy tax returns and resulting IRS penalties. After two unsuccessful mediations, won partial summary judgment and then a defense verdict in a week-long jury trial. (2006-2010)
• Defended accountant for family-owned automobile dealerships against claims by certain family members that he aided and abetted other family members’ defalcations and usurpation of corporate opportunity in opening competing dealership. After failed mediation, matter eventually settled. (2005-2008)
• Defended forensic accountants against apartment owner’s claims that they aided and abetted insurer’s bad faith when analyzing lost business income from fire loss. After fact depositions and expert reports, won dispositive motion and was awarded attorney fees. (2005-2006)

Representative Speaking & Publications

• Have written many articles on risk management and defending accountant liability claims for various insurance carriers, the Arizona Society of CPAs, and other publications. Was asked by Aspen Publishers to write a post-Enron book on accountant liability issues but declined feeling that the effort and time involved would not be worth the benefit. These articles include:

• • Common Discovery Disputes in Accountant Liability Litigation, American Bar Association Section of Litigation Professional Liability Litigation Newsletter (Spring 2013, Vol. 9, No. 2)
  • Loss Prevention for Accountants: Avoiding Malpractice and Litigation While Keeping Your Clients Happy, CPA Mutual “Of Mutual Interest” periodical (Summer and Fall 2013 issues)
  • Risk Management for Accountants: Avoiding Professional Liability Actions, Arizona Society of CPA’s Magazine (January 2013 issue)

• Have spoken on risk management and other accountant liability issues to various industry groups such as the AICPA, the Arizona Society of CPAs, CPA Connect and the Federal Tax Institute, including:

• • Faculty, AICPA Expert Witness Skills Workshop (January 24-26, 2013)
  • Uncertain Tax Positions and Protecting Privilege, Arizona State Bar Tax Section (June 17, 2011)
  • Risk Management For Tax Accountants: When Your Clients Aren’t Your Friends Anymore, CPA Connect Roundtable (October 23, 2009)
  • Faculty, Legal and Ethical Issues for Arizona Accountants, Half Moon Seminar (February 23, 2006)
  • Defending the Accounting Malpractice Case: An Overview of General Strategies and Tactics on Discovery, Motion Practice and Trial, Faculty, National ALI-ABA seminar on Accountants’ Liability (February 10, 2005)

Other Experience

Served two five-year appointments to the Law Review Advisory Committee of the Arizona State Board of Accountancy, which rewrote the Arizona statutes and regulations governing the accounting profession, culminating in revised A.R.S. § 32-701 et seq. (2009-2019)

 

 

*Jay Coleman, through GJC3 LLC, is an independent contractor of SLW.