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Accounting firm split heading for courtroom.

Rasco Burris & Winter, the Arkansas accounting firm formed in 1973 and recently ranked as the 11th largest in the state by Arkansas Business, was essentially busted up in August in a legal battle scheduled to go to trial June 29 in the courtroom of Pulaski County Chancery Judge Ellen Brantley.

Known for its work with health care providers, nonprofits and manufacturing as well as litigation support and business valuations the firm is now split into two businesses: Burris Adlong & Co. PLC, owned by Gary K. Burris; and Rasco Winter & Associates LLT, owned by Robert Winter, James Rasco and others.

Burris and colleague Rosemary Adlong set off the legal wrangling with a suit filed June 16 against former partners Winter, Rasco and Jane Oberste, and former employees Lance Talkington and Mark Langston.

As spokesmen for their firms, both Burris and Winter declined to comment on the pending litigation.

In the complaint, Burris and Adlong essentially claim that the defendants conspired to take clients from them without proper compensation, and met privately without their knowledge to discuss forming a new accounting partnership, or, alternatively, effecting a merger or other business arrangement with another Little Rock accounting firm.

The plaintiffs originally asked the court for $2 million in punitive damages, unspecified compensatory damages and various costs and fees. Later, though, Judge Brantley removed the possibility of punitive damages.

In a counterclaim, the other members of the Rasco Burris & Winter firm said that a 1986 partnership agreement provides that if a partner withdraws to practice accounting elsewhere and works for any existing clients of the firm within two years of departure, he must pay the firm either one-third of the client's previous 36 months' billings, or the total billings of the past 12 mouths, whichever is greater. Under those rules, the partners say, Burris owes the other partners about $859,049.

Burris also should provide an accounting of all work he has done for former Rasco Burris & Winter clients since leaving, the other members of the firm say, and Adlong allegedly owes the partners about $120,000 for violating an agreement to stay away from all but "her own" clients for a period of two years.

The former partners also claim that Burris failed to fulfill his duty under the 1986 agreement to bill for and collect payment on the work he performed for clients. They claim that Burris' alleged breach of contract and duties caused the firm to suffer damages and losses of up to $322,000.

Also, the partners say Gary K. Burris Ltd.'s capital account at the firm was overdrawn by more than $90,000; and that Burris owes $16,000 for his share of accounts payable and expenses.

Which Agreement Applies?

Burris claims in the lawsuit that the 1986 agreement from which his former partners' claims arise was nullified by a new agreement in 1993. But the other members of the firm deny there was ever a new partnership agreement. Burris quotes from the 1993 agreement in the suit, noting that it appears to specifically set aside the 1986 partnership.

When the partnership was originally formed between Rasco, Burris and Winter in 1973, Burris claims in the suit, the three men operated under an understood but unwritten agreement that each of their individual clients would be designated as that particular individual's client for the purposes of internal accounting and compensation.

Then, in 1986, Burris says, Rasco, Burris and Winter signed a new accounting partnership with Randy Fuller and Liles Henry. Despite this agreement, Burris says, the partners continued to operate as individual entities. On July 1, 1993, Burris claims, three new partners joined the firm - Randy Patterson, Mike Howell and Henry - but none of them signed the 1986 agreement. Burris claims that Henry actually executed a partnership agreement when he came to the firm that terminated the 1986 agreement.

After that, the individual professional corporations maintained by Burris, Winter, Oberste, Rasco and Adlong were general partners in the firm of Rasco Burris & Winter LLP, while Langston and Talkington were employees of the firm.

Even after 1993, Burris and Adlong claim, the firm was still operating under the understanding that any new client brought in by one of the partners of the firm would be accounted for as the client of that individual partner.

Burris and Adlong claim that Winter, Oberste, Langston and Talkington had secret discussions about coming up with a new merger - or some other business arrangement - with another Little Rock accounting firm, in a conspiracy to swipe clients without proper compensation.

They claim that the other partners illegally conspired to convert Burris' and Adlong's clients to their own client base, and improperly authorized bonuses for Talkington that were not approved by Burris and Adlong.

Winter, Oberste, Talkington, Langston and Rasco deny in court filings that they engaged in clandestine discussions to the exclusion of Burris and Adlong, and also deny that they were trying to effect a merger with another accounting firm in Little Rock or to form a new accounting partnership. They also denied trying to undermine Burris' and Adlong's relationships with clients of the firm.
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Title Annotation:Rasco Burris & Winter
Comment:Accounting firm split heading for courtroom.(Rasco Burris & Winter)
Author:Haman, John
Publication:Arkansas Business
Geographic Code:1U7AR
Date:May 24, 1999
Previous Article:Pension fund picks up pace of development; Arkansas Teacher Retirement System plans new building and retirement project.
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