Previous PageGeorge J. ("Jay") Coleman, III Partner

George J. ("Jay") Coleman III represents clients both in and outside Arizona in complex commercial litigation and other forms of dispute resolution. His practice has an emphasis on matters involving allegations of securities and business fraud, representation of accounting firms and law firms in malpractice litigation, franchising disputes, and failures of information technology systems.

Representative Matters

View

• Defense of Big Four and local accounting firms in numerous multi-million dollar audit, tax, appraisal, ERISA, and consulting malpractice cases 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 and the SEC. E.g., Hydroculture, Inc., v. Coopers & Lybrand, 174 Ariz. 277, 848 P.2d 856 (App. 1992)
• Defended regional bank in $15 million litigation over its sale on secondary market to 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"
• Defense of 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
• Defense of Seattle medical equipment manufacturer in litigation brought by its Arizona, West Texas, New Mexico, and Maryland dealers
• Defense of New York law firm against $2.4 million malpractice claim arising out of handling of Connecticut litigation
• Defense of 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
• Defense of Washington, DC, office of Am Law 100 law firm against $4.5 million claim for tax malpractice and attorney self-dealing/conflict of interest
• Defense of public company officers and directors in securities fraud litigation and SEC proceedings arising out of accounting restatements

George J. ("Jay") Coleman III is a commercial litigation partner in the Phoenix, Arizona, office of Snell & Wilmer, which also has offices in Denver, Salt Lake City, Las Vegas, Southern California and Tucson. Over the past 20 plus years, he has defended Big Four and local accounting firms in audit, tax and consulting malpractice, 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 investigations and proceedings before State Accountancy Boards and the SEC. Jay has published articles and spoken to both local and national audiences on issues concerning accounting malpractice and loss prevention. He is currently serving a five-year appointment to the Law Review Committee of the Arizona State Board of Accountancy.

George J. ("Jay") Coleman III is a litigation partner in the Phoenix, Arizona, office of Snell & Wilmer who concentrates a substantial portion of his practice in representing accountants.  Over the past twenty plus years, he has defended Big Four and local accounting firms in audit, tax and consulting malpractice, 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 investigations and proceedings before State Accountancy Boards and the SEC.  Jay has published articles and spoken to both local and national audiences on issues concerning accounting malpractice and loss prevention.  He is currently serving a five-year appointment to the Law Review Committee of the Arizona State Board of Accountancy. 

Representative Experience

View

Representation of Big Eight (Now Big Four) Accounting Firms

• 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 retail chain’s enterprise-wide SAP computer system.  Plaintiffs alleged not only negligence but also two fraud claims:  first that the firm knowingly did not have sufficient staff and expertise to install the computer system and second that the firm did not remit certain travel rebates to its clients (which had been the subject of a separate class action in Arkansas).  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 very favorable terms. (2002-2005)
• 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 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. 
• Defended $14.5 million (plus trebles and punitives) audit malpractice case in state court in Fort Worth, Texas, spending a substantial amount of time in Fort Worth over three years.  The plaintiff was a bank affiliated with the Bass Brothers and was 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 by Beus, Gilbert lawyers 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.  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.  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).  Hydroculture, Inc. v. Coopers & Lybrand, 174 Ariz. 277, 848 P.2d 856 (App. 1992).  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 dozens of matters ranging from the defense of audit, tax and appraisal malpractice, as well as securities fraud,  litigation, handling inquiries from and investigations by the State Board of Accountancy, complying with and where necessary contesting subpoenas, advising on engagement letters and resigning engagements, and otherwise advising on loss prevention matters. 

Publications/Speaking/Appointments

• Have written several 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.
• Have spoken on risk management and other accountant liability issues to various industry groups such as the Arizona Society of CPAs and the Federal Tax Institute.
• Have spoken at the national ALI-ABA seminar on Accountant’s Liability.  In 2002 organized and moderated a mock trial of an audit malpractice case and in 2005 authored an article and spoke on Defending the Accounting Malpractice Case:  An Overview of General Strategies and Tactics on Discovery, Motion Practice and Trial. 
• Currently serving five-year appointment to the Law Review Committee of the Arizona State Board of Accountancy.