What it would take to bring down another big accounting firm

The key to survival [of a Big Four firm] lies in the willingness of the partners to stay committed and at their desks — something that the Andersen partners did not possess, as proved by the two-week period in 2002 during which they bailed out en masse and thus smashed the firm beyond recovery.

A study done for McCreevy calculates that the partners of a European firm would bolt in numbers large enough to be destabilizing rather than be forced to finance a litigation payment that extracted a profit reduction of 15% to 20% over three to four years. Applying those assumptions to the Big Four's latest reported US revenues of $4.7 billion to $8.7 billion, the US firms would confront partner flight and possible failure at liability levels as small as $450 million to $1.8 billion. Those amounts are modest to the point of insignificance against the size of this decade's financial debacles — examples ranging from the $20 billion hole in the balance sheet of Parmalat to Enron's $67 billion bankruptcy.