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credit, reputation, and business generally which might result
from such a suit. Petitioner testified that he was new in the
practice, that he thought he was going to lose clients because of
the publicity, and that he would be held to a higher standard
because he was in a position of integrity and trust. Petitioner
also testified that the potential risk from the suit was treble
damages and that "It wasn't worth it."
We also think that a reasonable person, standing in the
place of petitioner or the S Corporation, would have thought that
the settlement with Color Q would be warranted in light of the
exposure to damages from the suit. The record shows that the
accounting firm, Arthur Andersen, performed an audit for Color Q
which showed that Mr. Jeffcott had, inter alia, changed names on
checks. Additionally, petitioner's counsel advised him to settle
the claim, and that advice appears reasonable under the
circumstances. In light of the S Corporation's potential
liability for the damages from the suit, treble damages under the
Ohio Corrupt Activities Act, the costs of the suit, and the
attorney's fees, we conclude that petitioner's fears were
reasonable. We think that a reasonable person would have thought
that the settlement payment in the amount of $193,500 was less
than the damages that could be assessed if Color Q's suit
prevailed. Additionally, we conclude that there was
justification for the belief that there existed sufficient
exposure to liability that a compromise was necessary. Old Town
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