Deloitte & Touche yesterday became the last of the Big Four accounting firms to say it would adopt limited liability status in an attempt to protect partners from Enron-style negligence claims.
The UK arm, which absorbed Andersen's former partners and much of its business after the firm's collapse last year, announced its intention to convert in early summer. PricewaterhouseCoopers, Ernst & Young and KPMG have switched already.
Sources said the firm had little choice because recruitment has become increasingly difficult following Andersen's demise. Partners, who share the firm's liabilities as well as its profits, are concerned that a successful negligence claim could leave them destitute.
Limited liability ringfences the liability only around those partners involved in a failed audit, leaving others in the partnership unaffected. As a condition, however, the firm must open up its books like a public company.
Accounting firms have been notoriously opaque about their finances in the past, but the Big Four will now all have to produce a report and accounts.
John Connolly, Deloitte's UK chief executive and senior partner, said: “Having reviewed the adoption of LLP, we believe that it is the best business structure for our firm. It will help us to continue recruiting and retaining the best people in the sector.”
Deloitte does not reveal its average profit per partner. For firms such as E&Y, it varies from £300,000 to £600,000 a year depending on performance. Deloitte had fee income of £714m last year and employs 10,000 staff across the UK.
The global firm is also in the process of selling the consulting division to management for about £2 billion.