The European Commission's Recommendation of 2008 on auditor liability relies heavily on the assumption that auditors are over-deterred. The economic rationale that underpins this assumption is entirely focused on liability towards investors and the US narrative concerning securities class actions. This approach oversimplifies the issue, because it does not consider why auditors really exist and what the different interests served by them are. Accordingly, it neglects that auditors' liability is multidimensional. This article analyses auditor liability's multi-layered regimes. It investigates who the auditor's principals are; whether the auditor and those principals are in a position to negotiate in order to design the optimal liability regime; whether and at what stage market failures prevent contractual negotiation; what kind of positive (or negative) interferences stem from multiple negotiations and a multi-layered liability regime; and how such a multi-layered regime might be designed. In doing so, the article makes reference to some existent legal regimes and comments on them. However, its analysis is functional, not comparative. The article argues that the auditor liability case is much more complex than the economic and the law & economics literatures suggest, and concludes that a generalised, uniform, worldwide approach in favour of liability reduction has no scientific grounds, at least at the current stage of our knowledge.