Having worked for a Big Four firm in an exceedingly junior role, it's quite clear how this happened, and how it could happen anywhere. These big firms attach their names to work done by very junior people. The companies have a lot of experience at what they do, so their processes tend to be okay at producing an acceptable end result, but so much of their work is done by utterly clueless junior folks, that it's amazing things don't go sideways more often. Then again, an accounting opinion is just that -- an opinion. In the end, the liability tends to be very limited.
To use a legal word I don't fully understand, it seems Goldman was completely negligent here, but not necessarily in a criminal way -- if that's possible. They had a client that needed a lot of hand-holding, but it was small potatoes to a big bank, and they utterly failed to serve their client's interests.
Of course, because they're the big fish, they've probably covered their asses pretty well in a legal sense, and won't owe a dime. It's not right, but it's probably what will happen, legally.
> These big firms attach their names to work done by very junior people.
Can confirm, work at a pretty large firm. Most stuff is drafted by junior dudes and signed off by their superiors. But I've also seen how the superiors sign, and mostly they do some basic checks and sign off. Further, companies tend to work with a four eyes principle that requires two signatures to sign off, and what tends to happen is that the second person says 'oh, I see xyz signed, so it must be okay' and signs it off without really checking. In fact we have folders of docs drafted by juniors that an assistant walks around with to collect the relevant signatures, which are stamped, not written.
Essentially everyone is overworked and manage way too many clients and the budget is being squeezed. And there's a bit of a race to the bottom, the sales people have clients telling them 'this office can do it for $270k per year, you're offering us $350k'. And the sales people say 'alright we'll match it', which means they're going to have to generate cost-cutting measures of $80k on that client that year, which mostly involves shifting the work to interims, interns and juniors who get $15-20 an hour and invoice $150 to the client.
"Our client agreements state that for any flights exceeding 5 hours, you may fly business class." (except what they don't tell you is you NEVER fly business class, because some engagement manager is trying to impress their senior and the client by billing as little as possible).
"NEVER eat hours, because it's critical that we are able to estimate the time for each engagement in the future. If we need to find cost savings, the engagement manager will make that determination and simply bill less if necessary." (Except everyone, from the most junior plebe, all the way up to engagement manager and beyond, are all trying to impress the person above them so hours get eaten at each and every level)
Yes in the sense that all employees except the management hate the current regime because they're having their budgets and teams cut and workloads increase, so me and my peers would fully agree with you. Less cost cutting, less profit, but a more sensible workload.
No in the sense that the prices to the customer aren't coming down to cost-price. The reason for this is that we deliver ridiculous value (i.e., with $250k of annual legal work, which is puny, you can generate millions in cost savings). You'd think then, that competing business would quickly arise and drive prices down, but the industry is so cyclical (and doomed to die as lots of things get automated etc), that it's not a great industry for new entrants to compete with the incumbents (which have consolidated with lots of mergers the past 20 years become quite massive firms with strong brand names that drive tons of inbound leads, besides if you're a small new entrant you tend to get bought out anyway)
Hell these firms are all in private hands and have been for a long time, the shareholders appoint a board to squeeze as much profit... which is why I concur with the OP, a lot of the business is driven by cheap juniors under the guise of a strong brand name, where senior staff spend the majority of their time on sales rather than actual work, and are called 'vice presidents' for that reason.
On the other hand, it's not all that crazy. The funny thing is, all the juniors are 100x more educated than the seniors. You've got 23 year olds with a double master's in econometrics and tax law, while you'll find some senior VPs who got into the business in the 70s or 80s who may or may not have a bachelor's in something. Sure the seniors have the experience and the kids are often clueless when they just start out, but they're also usually sharp, hard-working, well-read (in subject material), have quantitative skills and broad competencies. So it's not all that crazy.
Thanks for the reply. It's not all that crazy and I'm glad you elaborated on why new entrants don't come into the market and suck up that profit/inefficiency.
To use a legal word I don't fully understand, it seems Goldman was completely negligent here, but not necessarily in a criminal way -- if that's possible. They had a client that needed a lot of hand-holding, but it was small potatoes to a big bank, and they utterly failed to serve their client's interests.
Of course, because they're the big fish, they've probably covered their asses pretty well in a legal sense, and won't owe a dime. It's not right, but it's probably what will happen, legally.