Gossip roundup

• McKinsey still making bank on AI projects

• Strategy& seems to have a bleak outlook (source: intern)

• The consulting industry is being totally disrupted

• KPMG Australia’s consulting business is not doing well

• Partner’s take on why young consultants are leaving more often

Top story: The Six-Year Alix Partners vs. McKinsey Legal Battle Officially Over

Jay Alix, the founder of the turnaround consulting firm AlixPartners, has decided not to appeal a recent ruling that dismissed his long-running racketeering lawsuit against McKinsey & Co., effectively bringing his six-year legal battle with the major consulting firm to a close. Alix’s lawsuit, which was first filed in 2018, alleged that McKinsey concealed conflicts of interest from bankruptcy courts to secure lucrative contracts advising on corporate restructurings. According to Alix, this conduct led to AlixPartners losing out on significant business opportunities and revenue.

In early July, a federal judge dismissed Alix’s lawsuit for the second time, a significant setback in what had become a high-profile legal clash in the consulting world. Initially, Alix’s spokesperson indicated that he intended to appeal the decision, signaling that the fight might continue. However, with the deadline to appeal having now passed, the case has officially been closed, marking the end of this chapter in the ongoing dispute between the two consulting giants.

McKinsey has consistently maintained that Alix’s allegations were without merit, describing them as legally baseless and driven by anticompetitive motives. A spokesperson for McKinsey expressed satisfaction with the outcome, stating, “He has repeatedly failed to prove his case in over six years of litigation, and we are glad the federal court has shut down his case for good.”

Despite the dismissal of the lawsuit, Alix’s lawyer, Sean O’Shea, asserted that the litigation had achieved its intended purpose. O’Shea pointed out that since the lawsuit was filed, McKinsey has faced significant regulatory and legal repercussions, including over $30 million in fines from regulators and courts. O’Shea emphasized that Alix’s primary goal was not financial gain but rather protecting the integrity of the bankruptcy disclosure system. According to O’Shea, the lawsuit helped expose McKinsey’s unlawful conduct and brought about meaningful changes, making further litigation unnecessary.

McKinsey, without admitting any wrongdoing, has paid significant sums to resolve various government investigations related to its bankruptcy practices. In 2021, the firm paid $18 million to settle a government probe into its policies meant to prevent insider trading. Additionally, in 2019, McKinsey paid $15 million to resolve a separate investigation concerning its conflict-of-interest disclosures in bankruptcy court.

Last year, reports emerged that McKinsey was winding down its bankruptcy practice following numerous lawsuits and government probes into its recovery and transformation services division. While McKinsey denied that the division was shutting down, it confirmed that it didn’t have any active chapter 11 engagements at that time. A McKinsey representative reaffirmed the firm’s commitment to supporting its clients with “integrity, professionalism, and excellence.”

Read more here.

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