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One obvious way to deal with liability risks is to avoid them entirely. That’s been the strategy of Ted Jadwin, the general counsel at Trizec Properties Inc., a Chicago-based real estate investment trust. This spring, Trizec’s accountants at PricewaterhouseCoopers dropped a stack of papers on Jadwin’s desk and demanded that he sign them. The GC started crossing out everything he wouldn’t approve. The surprised auditors then told him that Trizec’s chief executive officer and chief financial officer had already signed off on the entirety of their work, as required by new Securities and Exchange Commission rules. But Jadwin refused to go along, arguing that he was a lawyer, not an accountant. How could he possibly say his company’s numbers were in compliance with generally accepted accounting principles, when he hardly knew what those principles were? Besides, the GC thought he knew why he was being asked to sign. “The accountants are making it a policy to get other officers at a company to certify, so when [the accountants] get sued, they can turn around and sue the company,” he says. The problem was one that Jadwin says he became aware of in an earlier conversation with his company’s insurers: He doesn’t have the insurance coverage necessary to protect himself against the increased liability. “If there is a mistake, the CFO and the CEO are covered by D&O insurance. I’m not. What if I’m sued?” A partner at PwC, who declined to be identified, confirms that Jadwin’s signature was requested. The partner adds that although the Sarbanes-Oxley Act requires only a CEO and CFO to approve a company’s financial statements, PwC often asks for the GC’s signature, too. Though the PwC partner defends the policy as “appropriate,” it seems unnecessary to others in the accounting industry. “I’ve never heard of something like that,” says Bill Bishop, president of the Institute of Internal Auditors Inc. “That’s ludicrous.” Despite the insistence of PwC’s auditors, Jadwin won the first round. He wasn’t forced by his CEO to sign, and the accountants relented — but only for the time being. They’ve promised a rematch for later this year. — Eriq Gardner

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