In response to a notice of intent to terminate its administrative services agreement, RSM McGladrey has filed a lawsuit against McGladrey & Pullen.
Under the agreement, which was made in 1999, McGladrey & Pullen provided professional services through RSM McGladrey, a wholly owned subsidiary of H&R Block.
In a statement last week, RSM said if M&P terminates the agreement, it will enforce extensive rights it has under all agreements with M&P including a contractual noncompetition provision. In the suit, RSM alleged that M&P has no intention of abiding by the terms of the noncompetition clauses.
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"This arrangement made sense in 1999," said Dave Scudder, managing partner of M&P, in a statement on its Web site, www.mcgladrey.com. "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 a statement on its site, www.rsmmcgladrey.com, H&R Block President/CEO Russ Smyth said that he feels the decision is not in the best interest of M&P partners, employees or clients.
"Regardless of M&P's final decision regarding its relationship with us, RSM will continue to provide the superb tax and consulting services that our clients enjoy today. We would prefer to continue working cooperatively to build better client service capabilities and to capitalize on opportunities for future mutually beneficial growth. However, if necessary, we are fully prepared to replace M&P in the overall business, and to make the necessary arrangements to assist clients' transitioning their attest work."
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