Justin McCarty is a co-leader of the firm's Professional Liability group and focuses on representing accounting firms and their professionals, including non-US network firms facing litigation or regulatory investigations in the US. For more than 10 years, Justin has represented accounting firms and their professionals in complex litigation in US federal and state courts and before arbitration panels and regulatory bodies. He has represented all Big 4 firms, as well as numerous other firms.
Justin has represented accounting firms in connection with a variety of claims, including allegedly negligent or fraudulent audit work, allegedly deficient tax advice and allegedly negligent consulting work. These cases involved issues such as: the audit firm's obligations with respect to an audit client's internal controls, to whom an auditor owes a duty, auditor independence, alleged causal relationships between an auditor's work and alleged damages and professional qualifications to perform specific work.
He has represented accounting firms in a variety of federal securities and derivative suits and other third parties. These cases focused on issues such as: subjective falsity, the pleading standards for negligence and fraud, securities tracing, loss causation and negative causation, substantive defense of audit work, expert witness qualifications and the demand requirement for derivative suits. Justin also has experience representing accounting firms in disputes with their former partners and network firms.
In addition to litigation experience, Justin has represented accounting firms and their professionals in investigations by the Securities and Exchange Commission, the Public Company Accounting Oversight Board and the Illinois Department of Financial and Professional Regulation. Justin has extensive experience advising both firms and individuals through informal and formal PCAOB investigations. Justin’s representation of clients in these matters included negotiating with regulators, providing written submissions and representing clients in depositions or testimony.
Justin currently serves as a co-chair of the American Bar Association's Professional Services Liability Section.
- Obtained complete victory on audit malpractice claim against an international accounting firm in a private arbitration matter in 2019 in which the audit client had suffered a significant fraud by one of its owners.
- Obtained complete victory on state law tort claims against a Big 4 accounting firm in a private arbitration in early 2019.
- Obtained dismissal of securities claim against Ernst & Young LLP in the Eastern District of Louisiana that alleged professional negligence in an audit of a bank placed into receivership. Kinzler v. First NBC Bank Holding Company, not reported (E.D. La. 2017).
- Obtained summary judgment for Ernst & Young LLP when the Southern District of New York held that an alleged corrective disclosure did not relate to the audit report of the auditor. In re OSG Securities Litigation, 2015 WL 3466094 (S.D.N.Y. 2015).
- Representing Crowe Horwath LLP in first-of-its-kind litigation by the Federal Deposit Insurance Corporation on behalf of the failed Colonial Bank and the Trustee for Colonial Bank's holding company for allegedly negligent outsourced internal audit services. Colonial BancGroup, Inc. v. PricewaterhouseCoopers LLP, CV No. 11-746.
- Obtained summary judgment for Moore Stephens Hong Kong when the Southern District of New York excluded plaintiffs' liability expert and held that plaintiffs failed to establish scienter. In re Puda Coal Sec. Inc. Litig., 30 F. Supp. 3d 230 (S.D.N.Y. 2014). Decision upheld on appeal to the Second Circuit in an important ruling for auditors that affirmed that expert testimony was required to pursue a claim against an auditor and that plaintiffs are required to show subjective falsity. Querub v. Hong Kong, 649 Fed. Appx. 55 (C.A. 2 2016).
- Represented Moore Stephens Hong Kong in other matters relating to its audits of Puda Coal, Inc.
- Obtained appellate victory for Crowe Horwath LLP when the US Court of Appeals for the Tenth Circuit ruled that an action brought under Section 11 of the Securities Act of 1933 must show that opinions in public statements are known to be false or at least without a reasonable basis. MHC Mutual Conversion Fund, L.P. v. Crowe Horwath LLP, et al, 336 F.3d 1109 (C.A. 10 2014).
- Argued successful motion to dismiss for Crowe Horwath LLP in California state court for allegedly fraudulent and negligent audit work relating to a Chinese agricultural company. Gearing v. China Agritech, Inc., SC 11-7290 (Cal. Sup. Ct. 2013).
- Representing accounting firms and their audit partners, both from the US and from non-US member firms, in SEC and PCAOB investigations.
- Representing accounting firms and their partners in disciplinary hearings before the Illinois Department of Financial and Professional Regulation.
- Obtained order compelling arbitration for Grant Thornton International in litigation related to claims by former partners of Grant Thornton Hong Kong. Order affirmed on appeal. Tang Chung Wah v. Grant Thornton Intern. Ltd., 2014 IL App. (1st) 1131808-U (Aug. 27, 2014).
- Represented Ernst & Young LLP in a series of matters concerning Bally Total Fitness, including the SEC investigation, securities class action and shareholder derivative suit.
- Represented Ernst & Young LLP in a Kansas arbitration relating to claims of fraudulent and negligent audit services.
- Advising accounting firms on the forms of engagement letters and other risk issues.
- Representing accounting firms in disputes with former partners.
- Represented individuals in connection with US Department of Justice antitrust investigations into alleged price-fixing.
- Represented financial institutions in SEC regulatory investigations.
The University of Iowa College of Law, JD
Senior Note and Comment Editor, Iowa Law Review
Saint Olaf College, BA
- US District Court for the Northern District of Illinois
- US District Court for the Southern District of Illinois