McGladrey & Pullen Announces Decision to Terminate Agreement With H&R Block

McGladrey & Pullen LLP issued formal notice of its intent to terminate its administrative services agreement with H&R Block. While McGladrey & Pullen’s audit practice is an independent, partner-owned firm, related professional services have been offered through RSM McGladrey under an agreement with H&R Block since 1999.

McGladrey & Pullen anticipates it will take at least seven months to fully unwind its relationships with RSM McGladrey and H&R Block. The process is expected to be seamless to the firm’s clients.

“This arrangement made sense in 1999,” said Dave Scudder, managing partner of McGladrey & Pullen LLP. “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.”

“We are taking this action because we believe it to be in the best interests of our partners, our employees and our clients. We see great opportunities for success and growth for McGladrey & Pullen as a traditionally structured firm able to provide full service across all industry segments,” Scudder noted.

On the heels of the announcement, Block and RSM McGladrey filed a lawsuit in Minnesota state court against McGladrey & Pullen and each of its 10 partners. RSM alleges in the suit that M&P has no intention of abiding by the terms of non-compete clauses, restrictions that prohibit it from encouraging or instructing RSM employees to quit, and financial agreements that prohibit it from obtaining new loans or debt. Scudder, said in a statement that he was disappointed Block chose to pursue litigation. IPA contacted a Block representative for comment but did not receive a return call.