NLR Accountants Carve Niche in Nursing Home Litigation

by Jamie Walden  on Monday, Jun. 8, 2009 12:00 am  

A small business of a dozen employees in North Little Rock has carved a niche in nursing home litigation by providing financial analyses for plaintiffs' attorneys.

A small business of about a dozen employees in North Little Rock has carved a niche in nursing home litigation by providing financial analyses for plaintiffs' attorneys.

Because some companies' structures are a convoluted web of shell companies and parent companies, mere mortals have a difficult time discerning how they are all connected.

CFO Network performs financial analyses of nursing home organizations that map out the structure of such companies, which helps attorneys build their case.

"We just basically help [attorneys] get a lay of the land of what entities are involved and how they're related financially, helping them understand how entities are in fact making money," said Allen Engstrom, managing partner of CFO Network.

CFO Network's financial analyses for law firms account for about 15 percent of its business, Engstrom said. The majority of CFO Network's business is providing an outsourcing option for small business that can't afford an accounting and financial advisory team.

A typical case, Engstrom said, would be a wrongful death suit against a nursing home.

The nursing home usually is a limited liability company that receives services from other LLCs that are all owned by the same people, Engstrom said.

"We go in and do analysis on all these other LLCs and figure out that money is going out the door for rent and janitorial services and administrative fees to these other LLCs. And we basically help attorneys and others kind of follow the money and figure out the true profitability, the global profitability of the other LLCs."

Engstrom said the service was different from forensic accounting because CFO Network doesn't delve into a company's books to detect improper accounting or fraud. Instead, CFO Network analyzes only entity relationships.

CFO Network stumbled on the idea a couple of years ago when a law firm sought its help with a financial analysis of a nursing home.

"And they were happy with it and continued using us and spread the word, ... and we've kind of built a little niche out of it," Engstrom said.

Chad Trammell, a partner at Nix Patterson & Roach LLP of Texarkana, said CFO Network's services are much more reasonably priced than having an expert witness perform the same function. He added that the information is often admissible in cases. And being able to outsource that work makes his time more productive, Trammell said.

 

 

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