Ernst & Young sued over Law Society of Upper Canada's massive indemnity deficit

Ernst & Young is one of five firms being sued in Canada by the Law Society of Upper Canada over alleged mistakes in the calculation of the profession's spiralling indemnity insurance deficit.

The society, which covers the province of Ontario, is claiming C$110m (£48m) following the alleged miscalculation of the deficit being carried by the Lawyers' Professional Indemnity Company (LPIC).

It claimed that in 1991 the deficit was calculated at less than C$1.5m (£660,000), while the plaintiffs claimed it was more than C$65m (£28m).

The statement of claim alleged that the Ontario-based management consultant and actuary Tillinghast, another of the defendants, “knew or ought to have known that if it miscalculated unpaid claims liabilities, the plaintiffs would be misled as to the amount of the liabilities”.

It added that Ernst & Young “knew or ought to have known that if it was not careful and prudent in reviewing, analysing and using Tillinghast's calculations, errors in those calculations would be carried forward into the law society's financial statements”.

David Rowney, an Ernst & Young spokesman, said the firm would “vigorously defend” its position. He added: “It is our view that the claim is without merit. Our work was performed with due care.”

Kevin Martino, of Tillinghast, would not comment while the issue was proceeding.