Lawsuits Against E&Y, PwC Show an Ugly Side of the Big 4

Robert DeNiro as Al Capone in The Untouchables:

“A man becomes preeminent, he’s expected to have enthusiasms. Enthusiasms, enthusiasms… What are mine? Baseball! A man stands alone at the plate. This is the time for what? For individual achievement. There he stands alone. But in the field, what? Part of a team. Teamwork…”

It must be heartbreaking to one day feel you’re part of a team, a big wonderful, eminent, respectable team and the next get cold-cocked.

Two new Big 4 lawsuits – one against Ernst & Young and the other against PwC – reminded me how many times professionals have written to say their firm had just knocked the stuffing out of them. They had been fired suddenly or a student’s offer was pulled at the last minute. They were crushed. Humiliated. Confused. Betrayed.

Ms. Yunjung Gribben, 43, is the lead plaintiff in a class action lawsuit against EY in California. Ms. Gribben says Ernst & Young offered her a job with a starting annual salary of $50,000, then pulled the offer, after she graduated, because of “a couple of C grades she had received in accounting during her senior year at CSUF.” Ms. Gribben says she graduated from Cal State Fullerton with a 3.6 grade point average. The case seems to be more about age discrimination – she says younger candidates kept their jobs – than it is about contracts.

The suit claims Ernst & Young offers job contracts to graduating college seniors that “compel” them “to work for EY to the exclusion of all other employers,” but allow the company “to legally renege or cancel the offer of employment” if the senior does not maintain a vague “strong academic standing.”

I’ve written about the one-sided contracts and the high pressure recruiting tactics of the Big 4 audit firms at re: The Auditors. When the economy started to turn in 2007, the Big 4 began to slow the pipeline of recruits by offering fewer internships, offering fewer interns full time jobs, delaying start dates, and rescinding offers for vague, supposed breaches of their one sided agreements.

Candidates felt helpless since, like Ms. Gribben, once they had decided amongst all offers – many of the best students used to have a choice of all four of the largest firms and more – they were left with few choices if their selected firm reneged. Not only had the other firms moved on and given their slot to someone else, but the taint of having their offer fall through intimidates many students. Complaining might end up on their “permanent record” and “blacklist” them for the rest of their career. Many were locked in a stasis that sometimes only corrected itself after a call or email to me.

I have spoken to former Big 4 partners. They tell me getting fired after twenty years, their whole post-undergraduate degree career, is like getting whacked in the knees with a baseball bat. One day you’re leading engagements at prestigious Fortune 500 clients, smoking cigars and drinking single-malt scotch at parties, buying the McMansion in a “better” suburb and putting the BMW in the driveway and the next day you’re putting a profile together on “Linked In” and setting up an LLC in case you have to do independent consulting for an extended period.

Colin Tenner is suing PwC in Ireland for disability discrimination. Mr Tenner said that after he had been mis-managed by PwC and bullied by a client, his health deteriorated, leading to medical absence from work. He was told that anti-bullying and harassment policies did not apply to him because he was a partner.

I’m not sure what the law is in Ireland, but it would be interesting to see a suit like this go to trial in the US. Typically they get settled, because the firms are so bad at handling these situations, there are almost always smoking emails and fat-head partners involved who don’t make good witnesses. Becoming a partner is no longer inevitable. It’s not about just looking good, doing good and getting along for long enough. Something as innocent as looking at a senior partner or client the wrong way, losing a client, or being human is an excuse in these economic times to “cut dead wood.” Interestingly, being sanctioned by the SEC is not.

What’s refreshing about these two cases, as sad as they are for me to read, is that these two professionals are fighting back, airing their own and their firms’ dirty laundry. They’re adding to the dialogue about life behind the walled fortresses of the audit firms in contrast to the goody-two-shoes PR the firms spit out about charity, diversity, climate change and their own self-serving business forecasts. I’ve often said you have to be either very rich or very poor to hit back at the firms – enough money to weather anything they throw at your or nothing to lose if they do.

Take heed and act accordingly in your own professional life. We may not be able to see their true financial condition, but we are beginning to see their flaws.

Francine McKenna is the founder and managing editor of Re: The Auditors and a Going Concern contributor. You can see all over her posts for GC here.