Attestation Update – A&A for CPAs

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Hints of what big litigation look like from the PwC overtime case

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PricewaterhouseCoopers has settled the class action lawsuit about not paying overtime to non-licensed accountants. More details and humongous amounts of whining in the comments can be found at Going ConcernPwC Settling California Wage & Hour Lawsuit for $5 Million

A few tidbits from the settlement, as motivation for you to do everything you can to avoid litigation:

  • $5.0M – total settlement
  • $2.0M – attorney fees
  • $0.925M – costs and expenses reimbursed to plaintiff’s attorneys
  • $2.075M – payout to the class

I have no idea how many members of the class there may be.  I’ll make an uneducated wild guess the average payout will be in the range of a few thousand dollars.

Attorneys spent 11,500 hours over 8 years on the litigation. That is an average of about 1,400 hours per year.

Their payout is an average of $174 per hour.

With my minimal knowledge of civil cases, I’ll guess that PwC incurred an equal amount, around $3M, defending the case.

Look at the spread, based on my wild guesses and rounding:

  • $8M – rough guess of cost to PwC
  • $2M – payout to members of class
  • $6M – cut that went to attorneys on both sides for their time and cost
  • 25% – portion of gross cost that goes to claimants

Lessons to be learned:

  • Don’t do things that will get you into a class action defense.
  • If you are a defendant, settle early.
  • If you are a plaintiff, settle early.

Question for you to consider:

Who made a killing on this?


In December 2014, Francine McKenna discussed the case: Ignoring High Reputation Risk, PricewaterhouseCoopers Fights California Overtime Class Action. She mentioned there are 1,944 class members.

Here are some more calculations, on an average basis:

  • $4,115 – gross cost, on average, to PwC
  • $2,572 – settlement per person
  • $1,067 – average amount to be received per member of the class

Eight years of litigation for an average of a grand a piece.


Written by Jim Ulvog

February 20, 2015, 9:39 am at 9:39 am

Posted in Other stuff

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