MINNEAPOLIS, Minn.-The country's leading credit union auditing firm, McGladrey & Pullen, is being sued by H&R Block subsidiary RSM McGladrey.
The move comes on the heels of M&P's announcement that it was terminating its administrative services agreement with RSM. In 1999, M&P sold non-attest assets and business to H&R Block, forming RSM McGladrey. The new entity performs accounting, tax and business consulting services while M&P took care of the audit and attest services-the two firms do share office space and some employees.
"This arrangement made sense in 1999," Dave Scudder, managing partner of McGladrey & Pullen said in a statement. "However, that operational and financial model does not serve us well as we address our future goals of client service, opportunity for our partners, and continued growth."
In the complaint filed with the Hennepin County Court, RSM McGladrey expresses concern that M&P will not live up to the terms of the non-compete clauses, which include encouraging RSM employees to leave and obtaining new credit lines outside of H&R Block.
"We continue to believe that the successful relationship we have shared for the past 10 years with M&P is a proven framework for high quality client service worth preserving. We are open to productive discussions with M&P to do so and realize the attractive opportunities we see ahead," said RSM McGladrey spokesperson Terri Andrews, who would not comment directly on the litigation. "At the same time, we are taking all appropriate actions to protect the value of this relationship and to preserve the status quo in accordance with McGladrey & Pullen's existing contractual obligations while we seek to resolve our differences. We remain hopeful that we will ultimately reach an agreement with M&P that is in our mutual best interest."
If M&P is able move forward with its plan to terminate the agreement with H&R Block, it should take about seven months to fully unwind all of its relationships. The firm pledged the transition will be "seamless" for all clients.
