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In a judgment that referenced Goldilocks and Oliver Twist, Ernst & Young secured the right to access a substantial collection of documents as part of its legal battle over the mass departure of partners to Alvarez & Marsal.
The NSW Supreme Court has granted EY Australia the right to access documents related to the defection of 36 employees – including five partners – to rival consulting firm Alvarez & Marsal (A&M) between June 2023 and August 2024
The decision, handed down by Justice Michael Meek, forces A&M and former partners Sean Keegan, Andrew Sharp, Jagmohan Singh, Adam Woodward, and Edward Consett to surrender documents related to their departures from EY – documents that the big four firm alleges may violate their partnership agreements.
In his ruling, Justice Meek likened EY’s request for the documents to the “Goldilocks dilemma,” observing that the firm had enough information to be concerned, but not enough to determine whether to commence legal proceedings.
“EY’s knowledge (a word which I note rhymes with porridge) ‘is just right’, allowing for a fairly broad scope of ‘temperature’. In Southey’s original story, the porridge of Wee Bear being ‘just right’ was a close to ideal state,” Justice Meek wrote.
“Unlike Goldilocks, but like the old woman, EY wants more information or knowledge. Pressing the literary porridge theme imperfectly further, essentially EY comes to the court, a little like Oliver Twist saying: ‘Please sir, I want more [gruel]’, i.e. here the request is for more knowledge.”
The dispute was triggered by the sudden and coordinated departure of senior staff on 8 June 2023, when three of the five partners – Sharp, Consett, and Keegan – resigned from EY within just 101 minutes of each other, using nearly identical language in their resignation letters.
Each used the expression “give notice of my retirement from the EY partnership effective immediately” and described the transition arrangements as “smooth”.
Shortly thereafter, on 13 June, the three partners were placed on gardening leave, with Woodward following on 19 June and Singh on 3 November.
The big four firm grew increasingly concerned upon discovering that Alvarez & Marsal’s intended tax leadership was composed entirely of EY partners on gardening leave. In response, EY issued letters to the departing partners outlining its concerns.
“It has come to our attention that 13 individuals have resigned from their employment with EY’s tax practice in order to commence a new role in A&M’s tax practice,” EY wrote to Woodward in October 2023.
“We consider your acceptance of a role with A&M, the intended composition of A&M’s tax leadership and the offers of employment made to EY employees to be no coincidence.”
Within the letters, EY also alleged that one of the former partners had personally made offers to the firm employee to join A&M, and described any such solicitations as breaches of the partner’s contractual obligations.
The judgment contains detailed accounts of conversations between current and former EY staff, revealing the tension and uncertainty that followed the mass exits.
One such exchange involved EY partner Ian Scott questioning colleague Jagmohan Singh about his intentions following an offer from A&M.
In October 2023, Scott had a phone conversation with Singh – now an A&M employee – during which Singh appeared conflicted between his loyalty to EY and the opportunity presented by former partner Adam Woodward.
“I can see that objectively EY is the better opportunity and that I have a lot to learn from you and the people I’m working with. But I worked for Woody for an awfully long time and when I spoke to him the other day he said ‘I need you at A&M’. That’s causing confusion,” Singh said to Scott over the phone.
A month after the conversation, Singh submitted his notice of resignation from EY and was immediately placed on gardening leave.
