In Williamson v. PricewaterhouseCoopers LLP, 9 NY3d 1 (2007), the Court of Appeals held that continuous representation does not apply to a continuing general relationship between the parties.
Rather, the Court held. "The nature and scope of the parties' retainer agreement (engagement) play a key role in determining whether continuous representation was contemplated by the parties."
The Court of Appeals concluded that the continuous representation doctrine did not apply in that case because, for the years in question, the plaintiff had entered into annual engagements with the defendant for the provision of separate and discrete audit services for the plaintiff's year-end financial statements and, once the defendant had performed the services for a particular year, no further work as to that year was undertaken (Id. at 10-11).
The Court of Appeals, for the first time, applied the continuous representation doctrine to an accounting malpractice action.
The court used the same principles it had previously outlined in the medical and legal malpractice areas and stressed two points.
There must be some "mutual understanding" between the parties to the engagement that the auditors would provide further representation as to a past audit and "awareness" by the parties of a condition or problem emanating from a past audit warranting further representation. Williamson, 9 N.Y.3d at 10-11.
The court further wrote that the "nature and scope of the parties' retainer agreement (engagement) play a key role in determining whether 'continuos representation' was contemplated by the parties." Id. at 10.
In the end, the Williamson court found that the continuos representation doctrine did not apply because each annual engagement letter between the parties contemplated separate and discrete auditing services each year; and once the defendant had performed the services for a particular year, no further work on that year was undertaken. Id. at 10-11.
Nonetheless, the court noted that the outcome would have been different had plaintiff "engaged defendant to provide corrective or remedial services (e.g., to reexamine a prior year's financial statements or redo a prior year's audit)." Id.