As the credit crisis rocks financial markets, audit firms are bracing for the inevitable onslaught of litigation and shifting personnel to prepare for new service demands.

Auditors are classic litigation targets when finances go awry, and the swift collapse of seemingly sound financial institutions is expected to clog the courts for years to come. “It is a given that they will be named in lawsuits,” says Jeff Mahoney, general counsel for the Council of Institutional Investors.

It’s not necessarily a given, however, that auditors will be saddled with ultimate responsibility. Some close to the audit profession say major audit firms feel confident ...