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Layoffs Watch ’13: Rothstein Kass

It's that time of year when public accounting firms start showing the underperformers the door and we have our first confirmed across the board cut at it has happened at Rothstein Kass. The first we heard of the layoffs was in mid-April when we were informed by an anonymous tip that the firm would be having "across the board 10-12% layoffs at the end of this month."

Then yesterday we received another anonymous tip that told us that the cuts had started: "Massive layoffs at Rothstein Kass tomorrow.  They started today in some of the west coast offices."

We checked in with a source who confirmed the tips, telling us "10% firm wide, all levels, all departments." Our mole gets the sense that it is a culling of the herd and that severance is "one week per year of experience with a 2-3 week minimum." This person also noted that more supervisors and managers are being affected by these cuts.

We reached out to the firm and a spokesperson provided us with a statement and clarification on the actual numbers:

As we continue to grow, it’s important that we consistently review our capacity against market demands and opportunities.  After careful evaluation, we have made some organizational changes, including a reduction of 77 staff members.  We’ve met personally with  those affected and are committed to helping them transition to their next phase through generous severance packages, benefits assistance and career support.

Per Accounting Today's most recent ranking of the largest accounting firms in the U.S., RK has 802 professionals (and 77 partners oddly enough), which means the reduction of 77 is, in all material respects, 10% of the staff.  

And while these cuts are bad news for those 77 people, our insider made it clear that (s)he was very happy working at RK. In that same vein, we received the following message from an eager RK associate back in March:

I am currently an Audit Associate 2 in the FS audit group. And let me tell you, it is a great place to work. The work is not conventional work; it's accounting, but it's accounting with a cool twist to it. We work in financial services…hedge funds, fund of funds, private equity. I work mostly with hedge funds, testing the different securities held by clients with assets under management of over $2,000,000,000. We deal with smart people, and get to interact with them starting at my level. I'm not even two years out of college! We work at a place where co-workers aren't just co-workers; they're co-friends.
You're damn right RK is the coolest accounting firm. We do our work twice as well as anyone out there, and ball out twice as hard. This job is great for me because I'm doing something that is challenging, and also making friends and having fun in the process (not to mention, later becoming an accounting guru and making bank in the hedge fund industry). RK is the ideal accounting job for me.

Rothstein Kass is 20th in the AT ranking, comes in at #8 in Vault's Accounting 50 and, probably most importantly, was back-to-back champions in the two GC Coolest Accounting Firm tournaments.

And while we appreciate the heartfelt rallying cry, this message will fall flat for anyone that's been in public accounting for longer than two years. That said, while time will turn even the most enthusiastic public accounting cynical, we almost always received good words about the RK. Forced ranking has become standard practice in public accounting so it should be no surprise that RK, a firm that can arguably described as having a national presence, would use it. Is that good or bad? Jack Welch would say it's smart business. Francine McKenna (and many other people) would say it's creates an uber-competitive working environment that reduces the incentive for people work together.
However you feel about the practice, it's going to be used in the top public accounting firms. There's very little doubt about that. Good luck to all those affected.