Coopers & Lybrand

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Coopers & Lybrand

1251 Avenue of the Americas
New York, New York 10020
(212) 536-2000
Fax: (212) 536-3035

Private Company
Incorporated: 1898 as Lybrand, Ross Bros. & Montgomery
Sales: $5 billion
Employees: 65,000
SICs: 8721 Accounting Auditing & Bookkeeping Services; 4110 Accountants; 8305 Professional Services Nec

Coopers & Lybrand, one of the oldest accounting firms in the United States, offers a wide range of professional financial and consulting services to thousands of prominent companies and financial institutions in more than 120 countries around the world. Unlike many other accounting firms, Coopers & Lybrand emerged from the 1990s recession unscathed and has retained its position among the top American accounting firms.

Accounting practices were necessitated by the increasingly complex and sophisticated needs of businesses during the early nineteenth-century Industrial Revolution. Accounting as a profession emerged over several decades in the United States, and by 1898, the year in which Coopers & Lybrand was founded, there was not yet a single school of accounting. Furthermore, the only texts available were British and these often failed to address American problems and practices.

Accountants therefore received their training on the job, initially as bookkeepers, the most able and talented ones trained by their supervisor in accounting practices and procedures. This was the route taken by the four American founders of Coopers & Lybrand: William M. Lybrand, brothers T. Edward Ross and Adam A. Ross, and Robert H. Montgomery. All had worked in the same firm of Heins, Lybrand & Co. in Philadelphia and had received the same training; all four would be active in establishing accounting as a profession. The Ross brothers, Adam and Edward, were pioneer members in 1897 of the Pennsylvania Association of Public Accountants, one of the few professional associations for accountants in the country. During this time, a British accounting firm known as Cooper Bros. & Co., founded by William Cooper, was celebrating its 44th anniversary. Nearly sixty years later, the American and the British firms would merge into Coopers & Lybrand International.

The four American employees of the Heins office pooled their resources, and on January 1, 1898 they opened a two-room, two-desk business in Philadelphia. Until 1973, the company would be known as Lybrand, Ross Bros. & Montgomery. Hours were extremely long, almost always beyond the official nine hours per day, Monday through Friday. For many years, young men hired by the firm would receive $7 a day and were expected to work evenings and be on call during weekends.

From the start, the firm had a reputation for high professional standards, which the four partners attributed to the example of their former chief, John Heins. Also from the start, clients were plentiful. Outside of his regular accounting duties, Adam A. Ross, who as an apprentice in Heins office had taken part in the first regular audit of a bank by a public accountant in Philadelphias history, lobbied for state legislation mandating certification for public accountants, a cause that his brother and partner, T. Edward Ross, would also espouse. Partners in the firm also gave lectures in accountancy in the evenings and were hard at work persuading the University of Pennsylvania to establish a night school in accountancy, which finally happened in 1902. Robert Montgomery undertook the first American textbook on accountancy, published in 1905, while also that year Lybrand contributed several articles to the new Journal of Accountancy, establishing the principles of the accounting profession. That was just the beginning of the many contributions the four partners would make over the years to the professionalization of their field.

Barely two years after the firm of Lybrand, Ross Bros. & Montgomery was founded, it was already necessary to move into larger facilities in Philadelphia. By 1902, the firms first brand office in New York City was established, followed by another in Pittsburgh in 1908. In its first forays into tax consulting, the company assisted in the drafting of the first federal income tax law in 1913, and a member of the firm, Walter Staub, wrote a seminal essay, Income Tax Guide, explaining the pending tax legislation. In 1917 Mongtgomery published the classic (and continuously updated until 1929) Income Tax Procedure 1917. When the author established a tax practice in the New York office in 1918, he was immediately besieged by anxious customers.

In 1919, Lybrand, Ross Bros. & Montgomery decided to expand their company into the District of Columbia. During the year and a half in which the United States participated in World War I, Montgomery served on Bernard Baruchs War Industries Board in Washington and also on the Board of Appraisers of the War Department; other firm members served on the Liberty Loan committee and engaged in other war efforts.

By the end of the war, the professionalization of accountancy and its indispensability to the countrys economic structure, were established. The greatly expanded firm of Lybrand, Ross Bros. & Montgomery, pacesetters in the accounting profession, were demanding college degrees of their job applicants. Because of the paucity of accounting schools at universities and colleges, the firm was willing to take on college graduates with little or no background in accounting, subjecting them, once hired, to a rigorous two-year night school program of training. Accounting being an exclusively male profession during this time, the company hired only men.

During the 1920s, the firm experienced rapid expansion. Branches were established in the center of the vital automobile industry, Detroit, in 1920, and as far away as Seattle. In 1924, when the firm merged with the accounting company of Klink, Bean & Co., offices opened in Los Angeles and San Francisco. Also that year, an office was established in Berlin, Germany, followed by a Paris office in 1926 and a London office in 1929, the year of the stock market crash. This would mark the beginning of the firms globalization that would eventually result in branches in over 120 countries worldwide.

The Great Depression was both bane and blessing to the accounting firm of Lybrand, Ross Bros. & Montgomery. The greatly expanded firm, employing hundreds of staff, was faced with shrinking business opportunities as financial institutions and corporations collapsed and went bankrupt. On the other hand, throughout the country and more importantly, on Capitol Hill, the crash was blamed on the lack of independent auditing of the stock exchange. With a new president installed in 1933, Congress established the Securities and Exchange Commission, the regulatory agency for public corporations and the stock exchange, which resulted in a plethora of auditing activities for the firm. The company also became involved in New Deal projects, serving, for instance, as independent auditors for the Tennessee Valley Authority after 1944. Throughout the Depression years, expansion of the company continued, with branch offices opening up in Illinois, Texas, and Kentucky. In 1935, Robert Montgomery became the president of the prestigious American Institute of Accountants.

During World War II over four hundred employees of Lybrand, Ross Bros. & Montgomery served in the armed forces. These accountants in uniform, along with 18 administrative assistants, received entertaining newsletters from the company wherever they were stationed; in the end, six members of the firm lost their lives in the conflict. Remarkably, the London and Paris branches of the firm stayed open for business throughout the war, with only the Berlin office having closed down in 1938.

By its fiftieth anniversary in 1948, the company employed nearly 1,200 staff members and 56 partners. The professionalization of accountancy by then was complete; the role of accountants in business and government unquestioned. The companys evolution in the postwar years therefore would be marked by an enormous expansion in the companys array of services and the continued internationalization of the firm.

Lybrand, Ross Bros. & Montgomery emerged from the war one of the largest accounting firms in the United States. Times were changing, however, and no accounting firm could afford to restrict itself to traditional auditing and accounting services. In 1952, the firm entered a new arena when it started a management consulting service for its clients in the banking and big business world. This was the first of what would become a wide array of consulting services as well as information services and special software packages with the advent of personal computers. While these services by no means supplanted traditional auditing and accounting, they had a significant impact on the firm. By 1974, the firm was the first to establish a career track in accounting for those with computer expertise.

The year 1957 marked the establishment of the European Common Market. Soon thereafter, a merger resulted in Coopers & Lybrand International, consisting initially of the firms Canadian and British branch firms. While all foreign branches of the firm would bear the name Coopers & Lybrand, the company in the United States retained its original name, Lybrand, Ross Bros. & Montgomery, until 1973. That year, the firms management decided in favor of adopting a single name for the entire global network of branch companies, which by then were located on all five continents. While the firms, in over 120 countries, remained autonomous, they shared common goals and policies.

Since 1971, Coopers & Lybrand headquarters have remained in the hub of the financial and business world, New York City, with an important office and political action committee located in Washington, D.C. By 1977, Coopers & Lybrand was ranked the third largest accounting company in the United States and was still among the Big Six accounting firms by 1993. In 1981, Coopers & Lybrand became the first American accounting firm to establish a foothold in China. The following year, the company played an important role in the breakup of the $115 billion telephone monopoly, AT&T. Despite the severity of the 1990s recession, Coopers & Lybrand did wellwith a 2.5 percent growth in revenue in 1991, the worst year of the recessionpartly due to its rapid adaptation to the changing needs of business and a lack of dependency on the domestic marketplace. With the fall of communism in eastern Europe, Coopers & Lybrand opened offices in Hungary, Poland, Czechoslovakia, Berlin, and Russia, and remains one of the few American firms to do business in eastern Europe. Consequently, the company secured a foothold in an area of the world that is likely to become profitable in the next century.

Further Reading

Bedrosian, Line, The Art of Accounting: CPAs Move Beyond Bean Counting to Assume Greater Roles, BusinessWest, March, 1993, p. 13.

Boys, Peter, Whats in a Name: Update (Names of Accounting Firms), Accountancy, March 1990, p. 132.

Cassidy, Tina, Brain Drain at Coopers, Boston Business Journal, February 8, 1993, p. 1.

Coopers & Lybrand: Foundation for Tomorrow, Coopers & Lybrand, 1991.

Coopers & Lybrand International, The New York Times, January 14, 1993, p. C6.

Coopers in TV Land, CPA Journal, March 1993, p. 8.

The Early History of Coopers & Lybrand, 18981948, New York: Garland, 1984 reprint.

Elliott, Stuart, Coopers & Lybrand (Accounts), The New York Times, November 25, 1992, p. C17, D18.

Felsenthal, Edward, Coopers Wins Suit, The Wall Street Journal, March 2, 1993, pp. B1011.

Lawyer, Gail, Largest Accounting Firms in the Metro Area (Metropolitan Washington Area), Washington Business Journal, March 19, 1993, p. 30.

Woo, Junda, Big Six Accounting Firms Join Forces for Legal Change (Firms Want Protection From Shareholders of Client Companies), The Wall Street Journal, September 1, 1992, p. B7.

Sina Dubovoj

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