(FORTUNE Magazine) – Imagine a company that eight years ago did not even exist. A company that employs 50,000 people, operates on six continents, competes against the likes of IBM and AT&T but is neither a computer maker nor a telecom outfit, leads its industry with revenues of more than $6 billion, and is growing at better than 25% annually. What's more, this is a private entity, one that could fetch as much as $10 billion if it went public. The company: Andersen Consulting, whose roughly 1,000 partners advise the world's largest corporations on how to run their businesses--and for their effort can earn more than $1 million a year each.

No company like that simply pops out of the ether. Andersen Consulting emerged in 1989, already with a billion dollars in revenue, from a kind of incubator, a mother company with 50,000 employees of its own that is part venture capitalist, part research and development lab, part training center, and part opportunistic fortune hunter intent on exploiting new markets. That company is Arthur Andersen, which the world knows as an accounting firm.

Is it strange that number crunchers in green eyeshades have a robust other life as consultants? Hardly. All the big accounting firms have been piling into that business in recent years, attracted by growing demand from corporate managers for advice on corporate finance, legal services, management strategy, and--Andersen Consulting's specialty--information technology. Of the seven largest consulting firms in the world today, six are actually part of accounting firms (see box, next page). Even the recently announced merger of Price Waterhouse and Coopers & Lybrand has more to do with their consulting operations than with the "assurance and attest" functions for which big accounting shops have traditionally been known.

But what is strange is that in this period of booming growth the two sides of the Andersen partnership--which separately rank No. 1 and No. 6 in worldwide consulting revenues and together constitute a behemoth that no other firm approaches--may be on the verge of blowing apart. It is already more than six months since their problems burst into public view at a meeting of their joint parent, Andersen Worldwide, where senior partners from each unit squared off against each other. Yet the feud remains unchecked. If anything, the opposing camps have become more adamant in the wake of two failed efforts to choose a new CEO for Andersen Worldwide last summer--first the accounting side's candidate, James Wadia, didn't muster the necessary two-thirds majority, and then the consulting group's George Shaheen. The board of directors ended up naming its chairman as interim CEO. No new election has been scheduled.

This is an embarrassing situation, to say the least, for an operation that earns most of its revenue by telling others how to resolve problems. And the screaming question becomes: Why can't these people just get along? Certainly the financial climate is hospitable: Even the most junior partners make more than $400,000; the top compensation is more than $3 million. So why, then, is there such an intractable split?

The answer, in part, is a matter of numbers. Since the accounting side has nearly twice as many partners, it effectively controls the parent company's management. But it is the consulting side--smaller and faster growing--that generates the most revenue and profit. To the consultants, that clearly indicates the superiority of their business model. This civil war is basically over who is best positioned and best equipped to lead the partnership in the years ahead.

The situation is complicated because the two sides of the partnership don't seem to like or trust each other very much. It is the kind of culture clash that can eat away at any fast-growing organization, with one unit that's entrenched, stable, and mature, and another that's young and growing without apparent limits. (More than half the worldwide firm's current crop of partners, in fact, were named after Andersen Consulting was spawned.) Money, naturally, is also an issue. The young Turks on the consulting side bristle at the fact that a portion of their profits is being diverted to older, less productive partners on the accounting side. The traditionalists counter that it's always been that way at Andersen: A rising tide of profits lifts all boats. If the consultants would just be patient, they'll get theirs in the end.

If there is a lightning rod for this clash, it comes in the form of a single person: George Shaheen, leader of Andersen Consulting and architect of its astonishing rise. If Andersen Consulting were a public company, Shaheen would be a star CEO, praised by shareholders for the value he's generated by steadily boosting revenue and profitability, envied by competitors for the way he's grabbed hold of a burgeoning industry at just the right time.

But to his partners at Arthur Andersen, Shaheen is often viewed more negatively. The unswerving loyalty of his troops is interpreted as somehow sinister--what one veteran partner even calls "cultlike." (Except for Wadia and Shaheen, almost no one at the firm would agree to be quoted by name for this article.) Shaheen is also criticized for important-sounding sins like dishonoring the bonds of partnership--in essence, for acting selfishly. "This organization has prospered with a number of personalities in it," says one longtime Arthur Andersen partner, in a typical comment. "The one constant with respect to the turmoil and divisiveness has been Shaheen."

This last observation is not something Shaheen and his followers would necessarily disavow. "I have a very fertile mind and a level of courage that I'm willing to stand up and see things differently, and try to get people to follow me," Shaheen says. He and the other consulting partners clearly see themselves as agents of change. Indeed, it is a badge they wear with pride.

LARGER THAN LIFE

Meeting Shaheen--tan, trim, and impatient--is a memorable though not altogether pleasant experience. He doesn't smile easily, and the way he sometimes purses his lips conveys obvious disdain. He has a habit of referring to the company he leads in the first person ("I grew--we grew--I!--Andersen Consulting grew at close to 27% last year") and to himself in the third person ("A best-client strategy in George Shaheen's language is..."). His gestures are short and sharp, his words decisive.

Shaheen started out at Arthur Andersen in the mid-1960s as a technical specialist and today keeps his office not in Chicago, where Arthur Andersen was founded, but in Palo Alto. The location is not an accident: From the outset, Andersen Consulting was a peculiar kind of consulting company--one whose competitors were more likely to be IBM and EDS than Bain and McKinsey. Its target clients were the biggest of the big: FORTUNE 50 corporations whose global operations and complex technology requirements demanded expert advice on the best computer system for the job. Shaheen's crew stormed into the marketplace, snapping up contracts to set up new systems and keep them running smoothly. They quickly gained a dominant position and continue to grow at a staggering pace. If Andersen Consulting were spun off as an independent public company, it would have ranked No. 292 on this year's FORTUNE 500.

And Shaheen is hardly content. After a yearlong strategic-planning exercise in the early 1990s, he says, he concluded that in order to realize Andersen Consulting's full potential ("We were always buried under this accounting mantle") he would have to "redefine the consulting industry."

"That sounds very arrogant and very pompous," Shaheen allows, "but it was the only way I could see where we would have a chance to have the other people play by our rules." The second phase is now kicking in, as the firm capitalizes on its existing relationships and broadens from the infotech area into a full-service consultancy. Shaheen sees Andersen Consulting as a kind of 21st-century Bechtel Group, only instead of carving dams and airports out of the wilderness, the company will be retooling management systems, reorganizing business processes, restructuring work forces, and leveraging knowledge capital in ways that transform entire industries. "The demand for that is huge," gushes Shaheen. "Bets are being placed today that will literally, in my opinion, dictate not who will be successful tomorrow, but who will survive."

Clearly, this man is ambitious, and those who don't share his ambition--fellow partners at Arthur Andersen included--had better get out of the way. When pressed to name a single tangible benefit Andersen Consulting derives today from its ties to the accounting side, Shaheen is silent for a full ten seconds, stirring restlessly in his chair. "Um, I think there clearly are benefits," he says finally. "I don't think it's one big thing. I think it's a multiplicity of things."

Later he explains his personal mission: "I'm going to give this firm everything I've got. My management team is. We are going to do everything we can to win. We have to. We have 50,000 men and women who have signed on with us. And I'll be damned if we're going to let them down."

Of course, the 50,000 he's referring to are the people at Andersen Consulting. The Arthur Andersen folks don't appear on his radar.

THE ANDROIDS ARE COMING

Shaheen's focus on "his" troops is unusual for the house of Andersen. There has always been a powerful communal strain that runs through the firm, ever since Arthur Andersen himself set up shop back in 1913. It's been the kind of place that people stay their whole lives: The interim CEO, for instance, Robert Grafton, has been with the firm 34 years; the prior CEO, Lawrence Weinbach, worked there for 36 years before leaving in August to become CEO of Unisys. Like many of their predecessors, they came from modest backgrounds and signed on straight out of college. Arthur Andersen--known throughout Chicago simply as "Arthur"--had its own, rigorous internal training system, a commitment to mentoring, and a strong shared belief that the firm as a whole was bigger than its parts.

The culture back then was all about loyalty, consistency in the eyes of the client, and unflappability under duress--a combination that eventually earned partners the nickname "Androids." As time passed there were changes in personnel and operations, but they were more like glacial shifts than cataclysmic jolts. As recently as the 1960s, there was an understanding that all professionals would pass the grueling CPA exam (Shaheen's class was one of the last to which that applied), and only in the 1970s did non-CPAs begin making partner. The influx of so-called "experience hires" who didn't grow up in the Andersen culture is an even newer phenomenon.

The jolt finally came in the late 1980s. Key partners in one of the firm's newest, most profitable lines of business, technology consulting, began leaving. The problem, in the minds of those partners, was that all the earnings of the firm were poured into one pot, from which everyone shared, even though the consulting unit was more profitable on a per partner basis. "They began to think, 'Well, we'd rather not be in one pot,' " recalls a former Andersen board member. " 'We'd rather have some mechanism where we keep more of what we make.'"

Eventually a compromise was reached: In 1989, Andersen Consulting was spun off into a separate business unit, with Shaheen its managing partner. Under the new arrangement, all the partners still retained ownership of the whole enterprise and would continue to share certain expenses, like training. But the profit-sharing system was rejiggered. Now each business unit would keep at least 85% of what it earned, for distribution among its own partners. Soon the Andersen Consulting partners were making a lot more than their colleagues on the accounting side. For a time, the fix seemed to work.

But problems still lurked. For one thing, the profit-sharing system dictated that up to 15% of one unit's earnings might be siphoned off by the other. Once during the early '90s, Andersen Consulting was the beneficiary of that system, enjoying an inflow of profits from the accounting side. But for the most part, the subsidy has flowed the other way, in increasing torrents. The other problem, of course, was that by separating these two units operationally, the cultural distance between them naturally began to widen.

The biggest problem, however, turned out not to be the strength of the consulting business, but the relative weakness of the accounting side. Arthur Andersen, like other accounting firms, saw that its core audit and taxes business was fast becoming a commodity, and while the business wasn't about to go away, it also wasn't going to grow much. The same financial imperatives that had led to the creation of Andersen Consulting now led Arthur Andersen into other consulting opportunities: from management strategy to legal services outside the U.S. to corporate finance (some 80 IPOs in China to date), and even information technology consulting for midsized companies that Andersen Consulting wasn't serving. Add it all up and you've got a multiline professional-services firm masquerading as an accounting shop.

That is a wise adaptation to changing business climates--except for one problem. Just as Arthur Andersen was venturing beyond the narrow boundaries of accounting, Shaheen was pushing Andersen Consulting beyond the bounds of technology. Both new paths, it happens, led to the same door, behind which sits not the CFO (Arthur Andersen's traditional contact) and not the chief information officer (Andersen Consulting's), but rather the CEO. In short, these two financially linked but culturally separate units began going after exactly the same business.

"People are not looking outward, they're looking inward," explains one recently retired accounting-side partner. "They're suddenly saying, 'Aha! I can see Andersen Consulting coming closer to us.' And Andersen Consulting is saying, 'Arthur Andersen is coming closer to us.'"

PARIS MATCH

The polarizing issue quickly became: Which side would give way to the other? This was hardly a question that took the partnership by surprise. On the contrary, as far back as 1995, the then-CEO of Andersen Worldwide, Larry Weinbach, had launched what he called his "Andersen 21" initiative to address the situation. Tellingly, just as the 18-month exercise was coming to a conclusion, Weinbach announced that he would not seek a third four-year term as CEO. Among the motivations, perhaps, was the fact that his signature initiative failed to breed reconciliation.

Stepping aside did even less to advance that goal. For the first time since Andersen Consulting split off in 1989, the full group of partners was faced with the task of choosing a new overall leader. Past Andersen elections had been carried out with Soviet-style deliberateness: A 12-person nominating commission--six from each business unit--came up with nominees; the board of directors then chose a single candidate; and individual partners were given the option only to "approve" or "disapprove." Victory was a foregone conclusion. "There was a very efficient internal system for being sure that, when a candidate went up, the support was adequate to make it happen," says former partner Victor Millar, now senior vice president at AT&T.

But not this time. The board--dominated by Arthur Andersen partners--was paralyzed. On the one hand, it refused to endorse Shaheen, though he was clearly the favorite of the nominating commission. On the other hand, it was unwilling to buck the commission in favor of the second candidate--Jim Wadia, an accounting partner who ran Arthur Andersen's London office--for fear of a partners' rebellion. That left a third choice: to allow both Wadia and Shaheen to address all the Andersen Worldwide partners at their upcoming meeting in Paris. The hope was that a consensus would emerge. But it didn't work out that way.

At the plenary session inside the vast Palais des Congres, Shaheen championed a bold proposal to fold most of Arthur Andersen's consulting lines into Andersen Consulting, and recast Andersen Worldwide as a broad-based consulting firm. "George basically said, 'This firm is in crisis,' " says one of the partners on hand. Arthur Andersen could continue as an accounting firm, Shaheen conceded, but only if it stuck to that discipline. Recalls another attendee: "[Shaheen] was saying, 'Let's recognize the fact that it doesn't make sense the way things are--so let's further segregate and separate.'"

Wadia's speech, by contrast, was a study in conciliation. Unlike Shaheen, he did not come to the stage as a universally known figure within the firm. He had been plucked from relative obscurity to represent a more moderate perspective, in part because he is soft-spoken and reasonable by nature. He proposed no drastic realignment, even suggesting a one-year waiting period before implementing any changes at all. He did indicate a willingness to accommodate the consulting side with regard to money and governance, and surprised some people with his flexibility on the fraternal competition issue. "He put forward views that were not necessarily pure, mainstream Arthur Andersen," says one supporter. "He offered a clear compromise on consulting, agreeing to pursue very distinct markets." The thrust of Wadia's remarks was, We can work this out.

After their speeches, Wadia and Shaheen took questions. One partner wanted to know from each of them, in effect, if you lose, can you support your opponent? As any politician knows, that question is a real softball--because it's not about your opponent at all; it's about respect for the process. Wadia's response was simple, clear, and immediately reassuring to the crowd: Of course he would. Shaheen was not as obliging. "He was hesitant," one partner recalls. "He implied that 'I'll do what I can to help.' But it was not, 'Yes, I'll give him my 100% support.'"

It would be hard to exaggerate the impact Shaheen's waffling had on the Arthur Andersen partners steeped in tradition. Many were simply stunned. "Everybody is entitled to their view," says one icily. "George's view was that he could not necessarily go with the will of the partners in that regard--of all the partners. When confronted with a test of partnership, he didn't pass."

GETTING PERSONAL

Four months later, Wadia is in San Francisco on a tour of his new empire after having been named managing partner of Arthur Andersen. And he is glowing. "I think I'm a lucky guy," he says, even though the overall firm remains in flux. "I've got a great job. I'm really excited about it. We're growing. We're a brand name. We've got great market recognition."

He certainly doesn't sound as if he needs Shaheen (whom, by the way, he didn't bother to visit in Palo Alto while he was in the neighborhood). Wadia notes that Arthur Andersen's business will grow 15% annually over the next three years and reach $8 billion in revenue by the millennium. His passion right now is a growing business area that sounds a lot like investment banking--not underwriting, but giving advice on management buyouts and LBOs. "So we start out with corporate finance," he says. "Bring in tax, bring in legal. Bring in our consulting skills on the reengineering of it. And typically what happens is, after the transaction's taken place, we get appointed auditors and tax advisers. It's a great business for us to be in."

Pretty convincing. But Wadia also, like most people at Arthur Andersen, dearly wants to keep Andersen Consulting in the family. There are practical reasons for this, having to do with heft, infrastructure, and mutual brand enhancement. And there are cultural reasons--the sacred partnership again. "We need to go back to the [Andersen] culture and values," Wadia says. "We've grown up together, we've trained together, we have a very strong history. There is a great affinity between the businesses."

But there's also a more visceral motivation at work. George Shaheen may be running Andersen Consulting, may even deserve the lion's share of credit in building it, but one thing he cannot claim to be is its owner. Andersen Consulting was devised, staffed, and seeded by the partners of Arthur Andersen, and they all still own it, together. In the end, that's why some partners find Shaheen and his plans for Andersen Consulting so offensive. He acts as if he owns what's not really his. Wadia doesn't say all this, but there are plenty of other partners who do.

One longtime Andersen partner talks about a period, several years back, when the regional office he was running was booming. "We could have said the same thing [as Shaheen is now],'We want to keep what we make,' " he says. "But we never did, because we recognized the way it works." He even implies that the vaunted profitability of Shaheen's unit is to some degree a myth, simply because the consulting side is stingier about sharing the wealth and making new partners. "We want to provide opportunities for our people--to admit more partners. We divvy it up among more people," he says bitterly.

Shaheen's performance in Paris made almost too clear that he is, in effect, mounting a takeover--he wants things to be done a different way. But he has forgotten, his detractors say, that in the end he holds just one share out of 2,700.

The reality is, Shaheen runs Andersen Consulting as if Arthur Andersen didn't exist--as if he were CEO of an independent entity. "Could we have built this company under a totally different name?" he asks rhetorically, referring to the debt some accounting partners claim Andersen Consulting owes its progenitor. "Yes, I believe we could. Absolutely we could."

Then he goes on: "If things are not going well for us--and you know I have a very strong vision of what we have to do in the future--I would be very proactive, without hesitation, to get out of here."

Why hasn't he already tried to split Andersen Consulting off? For one thing, there's the tricky matter of a poison pill in the partnership agreement. It's an ancient clause, left over from simpler times, that compels a practice group that chooses to leave to pay the remaining partners 1 1/2 times its annual revenues. The clause was put in place long before Andersen Consulting was created, to deter regional offices--say, the firm's operations in Atlanta--from breaking away. In theory, the rule could be applied to Andersen Consulting. That would create a $9 billion roadblock.

In any case, Shaheen gives no indication of thinking seriously about trying to engineer an IPO or a merger for his unit. "For some reason, people seem to think that Andersen Consulting has this desire to monetize itself," says Shaheen dismissively. "Couldn't be further from the truth."

What Shaheen is prepared to do is to stand and fight for his vision of Andersen Consulting, even if that means going head-to-head with his erstwhile partners. Last summer he announced a major reorganization for Andersen Consulting, planned and executed with virtually no consultation with Arthur Andersen. Even Andersen Worldwide's interim CEO was notified only after the fact, as a "courtesy," Shaheen explained at the time. The new structure is global, highly centralized, and grouped around whole industries. It lets Andersen Consulting easily incorporate new consulting services into its lineup and targets smaller companies as clients.

If that puts Andersen Consulting up against Arthur Andersen, so be it. "We take on IBM every day," says Shaheen, chuckling. "We take on EDS every day. No competitor scares us."

Shaheen seems to figure that time is on his side. As Andersen Consulting adds more partners, and older accounting partners with a stake in the status quo retire, the balance of power within Andersen Worldwide may inexorably shift his way. Shaheen himself could bolt--to start up a new venture or take over someone else's--but that doesn't seem likely. Presumably, he wants to unlock the equity he's already created, not abandon it. He can afford to wait.