NEW YORK (CNN/Money) - Arthur Andersen LLP, which is fighting a federal indictment related to its destruction of Enron Corp. documents, plans to cut 7,000 jobs in the United States as it struggles to survive a client exodus and continued defections of its member firms all over the world.

Andersen, which has about 26,000 staff in the United States, said the reduction would affect primarily the firm's audit practice and back-office administration. The layoffs will be implemented in the next several months, Andersen said.

"Of all the issues we have confronted recently, none compare to actions we are now forced to take with our employees," U.S. managing partner Larry Gorrell said.

The cuts, which had been widely expected, come as the Chicago-based accounting firm moves to execute reforms proposed by former Federal Reserve Chairman Paul Volcker, who heads an independent board charged with overhauling Andersen. Volcker has called for Andersen to split off its consulting practice and return to its roots as an auditor.

Andersen also has been struggling to settle a criminal charge the government brought last month alleging the firm obstructed justice by shredding documents related to its audit work for Enron. As Enron's auditor for 16 years, Andersen signed off on the energy trader's financial statements. Enron used thousands of off-the-book partnerships to hide nearly $1 billion in debt and inflate profits, according to a report by its independent directors. The energy company filed the biggest bankruptcy in U.S. history on Dec. 2.

Since the March 14 indictment by the Justice Department, Andersen has lost more than 100 audit clients and last week inked a deal to sell part of its tax unit to Big 5 rival Deloitte & Touche. Andersen's Brazil practice agreed to merge with Deloitte Monday, a spokesman told CNN/Money. The merger will add about 1,800 employee's to Deloitte's staff.

Andersen's Norway practice has also joined Ernst & Young, press reports said Monday. Ernst could not be reached for comment.

Andersen, once the world's most powerful accounting firm, did meet Friday with the Justice Department to hash out a settlement, according to Rusty Hardin, the lawyer leading the defense team for Andersen.

Hardin declined to comment Monday on reports that informal talks would continue this week. Andersen has pleaded not guilty to the single criminal count against it and a trial is set to begin May 6 in Houston.

Judge Melinda Harmon on Monday also delayed a request by plaintiffs suing Andersen for an injunction. If granted, the order would prevent Andersen from selling assets and releasing foreign affiliates from obligations to the partnership.

Judge Harmon, who is also overseeing the government's case against Andersen, set an April 17 hearing on the proposed injunction.

Andersen has offered less than $300 million, down from its original $750 million proposal, to settle the several shareholder lawsuits against it, press reports said. Currently, a mediator is working with both sides to help them come to a resolution.

"There are substantial obstacles to overcome," a spokesman for the University of California, lead plaintiff in the class action against Enron and Andersen, told CNN/Money. "A mediator is working with all parties."

Andersen could not be reached for comment on the reported settlement. The University of California spokesman declined comment.

Several employees expressed anger Monday at the federal indictment against Andersen and feel the criminal charge should have been aimed at executives of the Houston-based energy giant. So far Enron senior executives and staff have escaped any charges.

In its indictment of Andersen, federal prosecutors failed to name any specific firm employees and instead leveled charges against the whole firm for allegedly obstructing justice. For its part, Andersen has tried to place the blame on employees in its Houston office and has claimed that senior management did not authorize the document destruction.

"We all knew it was coming," said Kristina Romence, a 32-year-old event coordinator who was cleaning out her desk after three years at Andersen. "But there's a feeling of unfairness -- to be penalized for something that took place in Houston."

--Staff and Wires