Most CPAs — even those highly skilled at screening and bringing in new clients — will periodically encounter situations and client relationships that call for disengaging. While the subject of disengaging is typically thought of as (at best) unpleasant, disengaging can be a practice management tool that increases firm profitability and creates a better situation for both the CPA and the client.
Contact your professional liability and employment practices liability insurance carrier or agent as soon as an issue comes up. Adverse consequences often come from CPAs taking action before consulting their risk advisers. Better safe than sorry.