Arthur Andersen, the Original One-Firm Firm, Breaks in Two

This case is used internally at Kellogg and is not available for public distribution.

In April 1997, thousands of Arthur Andersen partners came from around the world for their annual meeting in Paris, held at the Palais des Congrès convention center. Representing the firm’s two business units—audit and consulting—the partners had gathered to make a decision about who should lead the firm into the 21st century. The two divisions were at war, however, in a conflict that had been brewing since the late 1970s. Because the board could not agree on a candidate, the partners were faced with a choice: top consultant George Shaheen, described by Fortune as “tan, trim and impatient,” or “Mr. Congeniality” Jim Wadia, a relatively unknown tax specialist who ran the London office. Each was given the opportunity to make his case before the nearly 3,000 partners. Shaheen portrayed consulting as the future and called for radical adjustments to the audit function, while Wadia advocated for peace and a one-year hiatus on any changes at all.