RSM McGladrey and McGladrey & Pullen (M&P) have patched up the contractual dispute that had threatened to split their collaboration.
The two firms agreed to extend the terms of their alternative practice structure until 1 May 2015. This has been approved by a vote of M&P partners subject to definitive documentation. This collaboration will automatically renew for additional five-year terms unless either party withdraws under clearly defined circumstances.
H&R Block president and chief executive Russ Smyth said the agreement provides a “stable” foundation for the future growth of RSM McGladrey.
“The discussions were ultimately healthy to review the needs of both firms and to identify how we can best manage our respective operations to improve client service, accelerate growth initiatives, improve partner wealth creation and increase shareholder returns while preserving and protecting the independence of M&P,” Smyth said.
H&R Block said the agreement largely retains existing restrictive covenants, as interpreted in the recently concluded arbitration proceeding, where a ruling apparently favoured H&R Block and RSM McGladrey.
This ruling will enforce a restrictive labour agreement involving employees of the two firms, H&R Block said.
The core alternative practice structure between the firms remains intact. This operating model sees M&P solely responsible for audit and attest work and RSM McGladrey responsible for other business advisory services.
Both parties agreed to enhance co-operation in various areas with the goal of aligning short and long-term strategies to enhance client service and improve operating efficiency and profitability.