It goes without saying that you are there to work as a team in the Big Four. This assumption is undoubtedly present in Big Four society even though it isn’t expressed explicitly. Every decision you make puts your career at risk if it isn’t focused on becoming a “member of the firm.” Your whole life is devoted to attaining that position.
The mystique around the collaboration is eroding, and it could fundamentally change the composition and character of the Big Four. Yes, things are changing, Mr. Dylan. Anecdotally, more and more senior managers are talking about their future intentions behind closed doors rather than in public.
These private conversations occurred outside of the office and were often the consequence of open advice provided to less seasoned staff members.
But where do you go?
More senior managers are thinking about VP and C-level positions instead of going for the partnership. Even high-achieving senior managers are seeking jobs outside the Big Four, citing lifestyle goals (i.e., getting off the road), pay opportunities, and less politically sensitive environments.
Emerging businesses are clearly concerned about the cost and sustainability of the partnership structure in addition to these internal issues. In the past, the partnership buy-in was thought to be the ideal investment opportunity. But in recent years, this idea has come under scrutiny.
It all started with Enron.
Andersen’s death has left many of the accountants and consultants in our community in pain, especially the former staff members who have sought refuge at the other Big Four. The risks of investing in the partnership are well known among Andersen employees, especially former partners.
Financial abuse was experienced by new partners who had been with Andersen for less than five years. Their buy-in finance was secured by their partnership units. Due to Andersen’s death, they were left in a vulnerable equity position; partners owed hundreds of thousands of dollars and could not sell their units to cover the loans.
KPMG just had a similar concern. Following an investigation into its sale of abusive tax shelters, KPMG negotiated a deal with the Justice Department. The settlement included a fine of $456 million. Even while KPMG was spared Andersen’s fate, each of its 1,600 partners still faces a punishment of about $300,000.
The declining interest in firm participation is supported by potential changes to the firm’s structure. BearingPoint and Accenture both stopped using the partnership model and are now trading on public markets. Because of the ambiguity surrounding the limited liability partnership model’s protections, the Big Four are thinking about incorporating instead of forming partnerships.
In the accounting and consulting industries, the large partnerships that were formerly thought to be an elite club are becoming less enigmatic.
Even though the companies themselves are undergoing a significant transformation, they continue to provide the best services available. Previously, all of the associates wanted to be partners. If senior managers could taste it, they wouldn’t think of anything else.
External forces are challenging the Big Four’s preferred structure. Previously believed to be an almost risk-free investment, Andersen and KPMG have shown us that this is not the case. This investment risk is increased by the LLP structure’s deteriorating protections. Talent is lured away from the partnership to better prospects while the legal system attacks this prestigious institution.