ANALYSIS: Client Profile - Opening up the books on Ernst & Young PR. As the leading accounting firms come under closer media scrutiny, PR has become more important than ever for the traditionally tight-lipped Big Five. Craig McGuire does a PR audit

Entrenched in one of the most lucrative and hotly contested spaces in the financial services arena, accounting giant Ernst & Young has realized that reactive, defensive PR just doesn’t cut it anymore.

Entrenched in one of the most lucrative and hotly contested spaces in the financial services arena, accounting giant Ernst & Young has realized that reactive, defensive PR just doesn’t cut it anymore.

Entrenched in one of the most lucrative and hotly contested spaces

in the financial services arena, accounting giant Ernst & Young has

realized that reactive, defensive PR just doesn’t cut it anymore.

This was partly spurred on when Ernst & Young became the first of the

’Big Five’ accounting giants to shed its consultancy business in March

of this year. E&Y sold the business to French IT giant Cap Gemini for

dollars 11 billion, mainly to appease suspicious regulators who are

constantly waving red flags over alleged conflicts of interest between

their auditing and consulting practices.

In Washington, DC late last month, E&Y rivals KPMG, Arthur Andersen and

Deloitte & Touche denounced an SEC proposal that would restrict the

types of consulting work that firms can provide for the companies they


Although the firms maintained that there are no proven cases where an

audit has been compromised by other relationships with a client, the SEC

wants to remove even the perception of shady behavior.

All of the Big Five (which also includes PricewaterhouseCoopers) have

either sold, plan to sell or are expected to sell their consulting

practices at some point. Just two weeks before E&Y announced its deal

with Cap Gemini in early March, PricewaterhouseCoopers disclosed its own

plans to separate its consulting arm from its audit business. KPMG is

reportedly mulling a divestiture as well.

When word got out about the dollars 11 billion deal, the traditionally

tight-lipped E&Y PR team had no choice but to meet the media head-on. ’I

suspect that the story of this deal broke before either (E&Y or Cap

Gemini) wanted it to,’ says Financial Times reporter Adrian Michaels.

’So, given that they were caught by surprise, they acted very well and

gave a very good rationale behind the deal.’

Defying the ’no comment’ culture

The navigation of the treacherous media waters was no doubt aided by the

department’s retooling last year. To spearhead E&Y’s PR overhaul, last

June the company recruited PR industry veteran Larry Parnell as its new

director of PR. Parnell says E&Y realized the importance of keeping pace

with the changing times. ’Historically, firms did not comment and just

took their lumps,’ he says. ’But ’no comment’ doesn’t work anymore. What

used to be a word-of-mouth referral business is now more marketing, and

PR is a big part of that.’

’The story was always there,’ says PepperCom managing director Steve

Cody. ’They just need someone like Larry to tell it.’ E&Y used PepperCom

prior to Parnell’s arrival, giving Cody a front-row seat in the early

stages of the revamp.

E&Y’s North American internal PR machine is structured like an external

agency based on an account team service model. There is one senior

professional responsible for each practice area - tax, audit and

corporate finance - and support staff for each practice.

The support staff includes eight pros based in New York and regional PR

pros planted in all major markets throughout the US and Canada. E&Y

earmarks well over dollars 1 million annually to support these internal


This structure, however, is not without its problems. ’Each practice

area is basically a business unto itself with multiple CEOs running

around,’ says PepperCom’s Cody. ’So now you’ve got multiple masters to

report to, which is challenging.’ Parnell calls Cody’s assessment

’fair,’ adding, ’It is a challenge in that you do not have the same

organizational structure or ’leverage’ that you have in a public

company. There is a chairman, but most partners consider themselves

leaders as well, and there’s no stock price to protect and enhance with

communications. If you are not careful, this can lead to communications


After getting its own house in order, E&Y next turned to its external PR

agencies. At the time of the sale, E&Y dismissed The Weber Group and

handed its dollars 1.5 million PR account to Hill & Knowlton. Weber

sibling Golin/Harris was the lead agency on the Cap Gemini deal, with

assistance from Weber.

While Weber, with its strong tech and Internet expertise, will continue

to work for the dollars 4 billion consulting unit under Cap Gemini, the

Boston-based agency wasn’t even considered for E&Y’s business.

H&K now handles corporate positioning and media relations for E&Y’s

three core groups in North America. Parnell says H&K could eventually

get the opportunity to handle some of E&Y’s attractive international

business as well. ’Today it’s just the North American business,’ says

H&K senior MD Anne Wright. ’Larry Parnell takes the right approach and

hasn’t put an edict that (other regions) must work with H&K.’


As privately held companies, the Big Five simply never really had much

of an incentive to actively pursue media coverage. ’Privately held

companies just do not have the culture of communicating news or the

communications experts who are willing to engage the media,’ says the

FT’s Michaels.

’But within that culture, Ernst & Young is probably the most


But Ernst & Young has been more concerned with benchmarking against its

rivals. ’Ernst & Young sees (Arthur) Andersen as the 800-pound gorilla

from a corporate communications and media relations standpoint,’ says

Cody. ’Then there’s also PricewaterhouseCoopers. Those are the two

benchmarks they hold themselves to.’

In an effort to gauge its media outreach efforts, E&Y recently

commissioned a study from Delahaye/Medialink that surveyed 33 internal

clients and 34 reporters from outlets including The New York Times, USA

Today, Business Week, Fortune, Forbes, Investor’s Business Daily and the

Associated Press.

’Interestingly enough, we were regarded very highly by the business and

trade publications as one of the most responsive of the Big Five,’ says

Parnell. ’Internally, though, we didn’t fare as well, so the standards

and expectations inside are higher.’

The future (and the fraud)

Looking ahead, the biggest challenge for E&Y’s PR pros is to further

develop the global brand - promoting new programs such as E&Y’s Online

Tax Advisor service to 13 countries worldwide. Then there’s the

sponsorship of events. The company co-sponsors the ’Entrepreneur of the

Year’ awards with CNNfn, whose show Entreprenuers Only is in turn

co-financed by E&Y.

But just as important, says Parnell, is drawing public attention to the

company’s expertise. ’There are key issues we really want to comment on

and want to be known for,’ he says.

One thing E&Y pros don’t want to talk about, however, is an ongoing suit

with Cedant. In a court filing, Cedant contends E&Y knew of widespread

fraud at CUC International, a predecessor of Cedant, by 1997, and did

not act. E&Y countered it was the fault of Cedant’s current CEO, Henry


Also complicating things is news that E&Y chairman and CEO Philip

Laskawy plans to step down in July 2001. Richard Bobrow, currently the

firm’s senior vice chairman for assurance and advisory services,

corporate finance and tax, has been named as Laskawy’s successor. ’We’re

working with his successor on identifying issues and platforms for him

personally,’ adds Parnell. ’The industry is changing and we’re changing,

which just means our PR needed to change.’


PR chief: Larry Parnell, director of PR

Associate directors: Ken Kerrigan (tax), Les Zuke (audit/firmwide),

Keith Hark (corporate finance/industry groups)

PR staff: 30 in North America, 30 more worldwide

PR budget: dollars 2.5 million.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in