Three days into its trial on obstruction of justice charges, Arthur Andersen LLP agreed to Ernst & Young LLP's acquisition of its Pittsburgh audit and tax practice, including eight local partners, the two public accounting firms said Wednesday. The deal — a month in negotiations and finalized Tuesday night — involves nearly 80 other Andersen employees locally. The combined firms will remain based in downtown Pittsburgh under the Ernst & Young name. The new blood elevates Ernst & Young's status from the Pittsburgh area's fourth-largest accounting firm to a close second-largest. "This transaction is another significant milestone along our path to success," said James Williams, managing partner of Ernst & Young's Pittsburgh office, in a prepared statement. "By increasing our presence in Pittsburgh and by recruiting the best talent available, we will continue to deliver the highest caliber of service to new and existing clients," he said. Ernst & Young's local clients include PNC Financial Services Group, Dollar Bank, American Eagle Outfitters and Pittsburgh Mercy Health System. Arthur Andersen's local clients — which Ernst & Young will endeavor to retain — included Education Management, Black Box and Wabtec. Meanwhile, in Houston, Arthur Andersen is struggling to survive in a criminal trial over charges it shredded documents subpoenaed in the Enron Corp. investigation. The controversial energy giant declared bankruptcy Dec. 1 in the nation's biggest such filing. Andersen, which audited Enron's books for 16 years, as a result has suffered a surge of client departures. They include household names such as Colgate-Palmolive, United Airlines (a Chicago-area neighbor of Andersen's) and Kennametal, the high-tech, cutting tool-maker based in Latrobe. Like other Big Five firms, Ernst & Young has picked up some of Andersen's fallout. Aside from the latter's Pittsburgh office, Ernst & Young acquired Andersen's Detroit practice on Monday and is said to be eyeing several of its other U.S. offices. Not going in the deal is Andersen's consulting practice. The firm yesterday agreed to sell that to KPMG Consulting for a reported $284 million. KPMG was spun off last year by KPMG LLP, another Big Five accounting firm. "(Ernst & Young) is not taking on the consulting side because we're not in the consulting business," said Ernst & Young Pittsburgh spokeswoman Christine Moran. Ernst & Young's local office is based in One Oxford Centre. Andersen workers will remain based at One PPG Place for the time being, said Moran. "The end goal is to get them all in the same place," she said of the merged firms' workers. Andersen's employees began orientation on Ernst & Young systems yesterday. The deal also makes Pittsburgh's CPA ranking a horse race, according to each firm's accounting: =Ernst & Young now has 371 accounting professionals here, up from 284. =PricewaterhouseCoopers LLP has 355 accounting professionals in Pittsburgh. =Deloitte & Touche LLP has 698 professionals here, but almost half of them are on the consulting side. Terms of the Andersen accounting merger were not disclosed. Ernst & Young's Williams could not be reached yesterday. Also unreachable was Helen Lemmon, Arthur Andersen's former Pittsburgh managing partner. Lemmon has joined Ernst & Young's Pittsburgh office as managing partner of global accounts. "As you can imagine, it's been a trying time for Andersen employees," said Moran.

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