Your client, Ernie Entrepreneur, has been operating his business for the past five (5) years. The first year Ernie was busy getting established and acquiring customers. Years two through five, however, proved very successful for Ernie as he was able to expand the customer base, his revenue base, his employees, and his business assets. Unfortunately, a sudden, unanticipated downturn in the economy in this, his sixth year of operation, has caused Ernie to lose a large portion of his customer base. He has spent money advertising with various media in an attempt to gain new customers, but his income from services remains flat and declining. Likewise, his stockpile of financial resources is being rapidly depleted forcing Ernie to contemplate downsizing and layoffs as the bills mount faster than he can pay them off.

As his business lawyer, Ernie Entrepreneur once again seeks your advice regarding his options for continuing to operate his business. Specifically, he seeks advice on the following:

1. Bankruptcy -- how does it work? What would be the effects of bankruptcy on his business and on Ernie personally?

2. Accountants' Legal Liability -- If Ernie's extreme losses can be traced to errors committed by the accounting firm, Dewey, Chetum, and Howe, LLP, that Ernie has retained for the past five years to manage the business's books and records, what legal recourse, if any, does Ernie have against his accountants? What theories for liability might apply?