The lower level of activity, due to the difficult economic environment and Enron affair, has decreased the demand for Andersen U.K.'s business, which no longer justifies the current staffing levels.

Andersen's U.K unit announced last week it has agreed to merge with Deloitte & Touche, which will make Deloitte the second largest accounting firm in the U.K.

Fired employees of Andersen's U.S. units, Arthur Andersen, Wednesday filed a class action suit charging their layoffs violated the federal Worker Adjustment and Retraining Notification Act, a law that was designed to protect blue-collar employees from sudden plant closings. The suit was filed in U.S. District Court by Nancy Roquet on behalf of 7,000 colleagues. (See Also: Andersen to Lay Off 7,000)

The suit seeks damages in the millions and to force Andersen to pay the difference between the severance axed employees received and 60 days pay. It also asks the court to order the company not to destroy personnel records.

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