Exposure to a professional liability claim can be limited by using the engagement letter to establish clear expectations for the valuation work to be performed, according to an article in the AICPA’s FVS News. This technique, however, may not limit liability if the dispute ends up in court. Therefore, the engagement letter should also provide for mediation or arbitration as an alternative to court for handling disputes. “Compared to a jury, arbitrators might have a better appreciation for the nuances of valuation work,” which could be more favorable to the practitioner, says the article.
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