RSM McGladrey: “The sharks are swimming”

Could it be a “classic management-and-union battle?”

McGladrey & Pullen shook the accounting world July 21 when it announced that it planned to terminate a service agreement with RSM McGladrey, a unit of H&R Block Inc. and the nation’s fifth-largest accounting firm.

Get the story here:

• The saga is just beginning: Block files suit against McGladrey
• Now it’s getting ugly: H&R Block talks tough with McGladrey
• McGladrey cuts the cord with H&R Block

“There really isn’t a precedent on this,” Allan Koltin, CEO of Chicago-based accounting consultant PDI Global Inc., tells James Dornbrook at the Kansas City Business Journal.

Koltin, who has worked with M&P, RSM McGladrey and H&R Block, said Block hasn’t deterred M&P from building its practice. In fact, he said Block invested many millions of dollars in advertising, technology and acquisitions to build RSM McGladrey and M&P.

“Really, what it all boils down to is the economic split (for profits),” Koltin said. McGladrey CEO Dave Scudder “might say it’s the regulatory environment and Block prohibited them from entering certain niches they wanted to get into, but those are all secondary issues.”

Koltin said he sees M&P’s move as a negotiating ploy, similar to a classic management-and-union battle. M&P went public with the dispute, he said, and that turned up the heat to negotiate a settlement.

“Mega-regional and national firms are all licking their chops, issuing an all-points bulletin to go and raid people and clients at both RSM and McGladrey & Pullen,” Koltin said. “So the smart thing is for M&P and H&R Block to settle their differences. Unfortunately, now they have to do it in a public arena while the sharks are swimming around the boats.”

Koltin said that because competitors are looking to take advantage, the situation won’t drag on for six months.

Posted on August 3, 2009