Accounting malpractice; Claim for attorney fees as damages; The “American rule”; Applicability of Hark Orchids, LP v Buie

In an order in lieu of granting leave to appeal, the court reversed in part the Court of Appeals judgment (see eJournal # 84172 in the 8/26/25 edition), and remanded the case to the trial court. It held that the Court of Appeals erred in ruling “that the American rule barred plaintiffs’ claim for attorney fees” in this accounting malpractice action. The Court of Appeals found that the court’s recent decision in Hark Orchids did not apply here, concluding “Hark Orchids was limited only to claims for attorney fees as damages for legal malpractice and declining to apply it to claims for attorney fees as damages for accounting malpractice as well.” But the court clarified that its “decision in Hark Orchids is not so limited[,]” noting that the same principles applied there “hold true for accounting malpractice.” Pursuant to that decision, the court held “that plaintiffs’ claim for attorney fees simply ‘does not implicate the American rule.’” However, as it “cautioned in Hark Orchids, ‘the client cannot recover any and all fees that the client incurred in attempted mitigation. Attorney fees subject to recovery must be reasonable and necessary to mitigate the harm from malpractice.’”