Baker Tilly Arbitration Ruling: Illinois Court Keeps Accounting Malpractice Suit in Court

In the Baker Tilly arbitration ruling filed on September 25, 2026, the Illinois Appellate Court held that the accounting firm could not force a 40-year client's malpractice suit into arbitration, because the engagement letters that contained the arbitration clauses expressly excluded the Wisconsin tax work the client is suing over. The panel affirmed a Cook County judge's finding that the excluded work was done under an unwritten, oral arrangement with no agreement to arbitrate, and that a court, not an arbitrator, gets to decide which of the parties' agreements governs.

The decision, Weber v. Baker Tilly US, LLP, 2026 IL App (1st) 251001-U, is a nonprecedential order under Illinois Supreme Court Rule 23. It is still one of the cleaner applications yet of the Supreme Court's "two contracts" rule from Coinbase, Inc. v. Suski. It matters well beyond accounting. Any business that has signed an arbitration clause for some of a relationship and handled the rest informally can meet the same problem, and that includes the consumer platforms whose clauses drive Mass Arbitration: the clause reaches only what the contract covers, and a Delegation Clause cannot carry a dispute into arbitration if the work sits outside that contract.

What did the court decide in Weber v. Baker Tilly?

The First District, Fifth Division, affirmed the circuit court's order denying the Motion to Compel Arbitration filed by Baker Tilly US, LLP and Jeremy Bivens, a Baker Tilly partner. Justice Oden Johnson delivered the judgment, and Justices C. A. Walker and Wilson concurred.

As summarized in the order, the holding is that the defendants' motion "was properly denied when there was no written arbitration agreement between the parties that governed the services comprising the alleged accounting malpractice claims."

The ruling rests on three conclusions:

1. Who decides. The engagement letters delegated Arbitrability questions to the arbitrator only for work inside their scope. For work outside it, Baker Tilly did not show "clear and unmistakable" evidence that the parties agreed to arbitrate arbitrability, so the court decided the question.
2. Which contract governs. The Wisconsin tax work was not covered by the letters. It was covered by a separate oral contract, and when parties have two agreements with different arbitrability terms, the court has to decide which one controls.
3. What that contract said. The oral contract had no arbitration term. The trial court's findings on both points were reviewed under the deferential manifest-weight-of-the-evidence standard and upheld.

Who are the parties, and what is the malpractice claim about?

The plaintiffs-appellees are Louis Weber, chief executive of the publisher Publications International, Ltd. ("PIL"), and PIL itself. The defendants-appellants are Baker Tilly US, LLP, one of the largest US accounting and advisory firms, and Bivens. The order records that Weber had done business with Baker Tilly for more than 40 years.

The malpractice claim is about Wisconsin taxes. According to the order, the allegations cover:

• preparing Wisconsin state tax returns;
• completing a Wisconsin state nexus questionnaire issued by the Wisconsin Department of Revenue (WDOR);
• advising on the tax effect of a restructuring between PIL and a related entity the order calls JRS; and
• negotiating a state tax controversy with the WDOR.

That work was done between 2020 and 2024 but related back to tax years starting in 2015. The order describes an additional 2015 Wisconsin return filed in 2020 after the WDOR questionnaire prompted an investigation. It also describes an agreement reached with the WDOR in March 2020 under a "Liability Settlement," which the order distinguishes from the written, finalized Closing Agreement the WDOR requires. Baker Tilly prepared Wisconsin returns in April 2020, and the plaintiffs made the agreed payments in May 2020. The order also recites a WDOR assessment totaling $1,665,977.76, due by June 10, 2022. The merits of the malpractice claim were not before the appellate court, and nothing in the order decides whether Baker Tilly's advice fell below the standard of care.

Why the engagement letters did not cover the Wisconsin work

Baker Tilly's position was simple. The firm had engagement letters with PIL, the letters had arbitration clauses, and the Wisconsin work related back to tax years the letters covered, so everything belonged in arbitration.

The circuit court rejected that argument by reading the letters themselves. They excluded "other services" altogether and said that "tax consulting services" needed a separate engagement letter. The listed consulting services were "R&E credit consulting and/or computations, mergers and acquisitions, due diligence, state nexus, federal or state tax controversy assistance, international tax, or organizational tax issues."

Almost every part of the malpractice claim appears on that list. The WDOR nexus questionnaire is "state nexus" work. The negotiation with the WDOR is "state tax controversy assistance." The advice on the PIL/JRS restructuring is an "organizational tax issue." The court also found that preparing the Wisconsin returns was outside the letters' scope. Baker Tilly never produced the separate engagement letter its own template required for this work.

The table below matches each part of the claim to the letter language the court relied on.

Alleged malpractice	Engagement letter treatment	Result
Wisconsin state nexus questionnaire	"State nexus" listed as tax consulting needing a separate letter	Outside the letters
Negotiating the Wisconsin tax dispute with the WDOR	"Federal or state tax controversy assistance" needs a separate letter	Outside the letters
Advice on the PIL/JRS restructuring	"Organizational tax issues" needs a separate letter	Outside the letters
Preparing Wisconsin state returns (2020–2024 work on years from 2015)	Found by the circuit court to be outside the scope of services	Outside the letters
Any separate engagement letter for the above	None produced	No written arbitration term

Did Baker Tilly's argument that the work "related back" to the old letters work?

No. Baker Tilly argued that the later work "related back" to the earlier letters because it concerned tax years those letters covered. The court looked at what kind of service was performed, not which tax year it concerned. A letter that excludes a category of work does not come to include it because the excluded work involves the same years.

Baker Tilly also argued that no oral contract could exist, because no communication "included discussion, much less agreement, on price and payment." It called those material terms of any service contract. That argument ran into Baker Tilly's own conduct. The firm admitted it did the Wisconsin work and was paid for it. The trial court concluded that, since there was no written contract, the parties had in fact formed an oral contract for the Wisconsin services, and that this contract did not include arbitration.

How did credibility decide the Baker Tilly case?

The trial court's credibility findings did much of the work, and the deferential standard of review protected them on appeal. Three points stand out in the order.

• No paper for the extra work. Bivens testified that Baker Tilly never performed services without a written agreement. He could not give the court any written, signed engagement letter for the Wisconsin services.
• Out-of-scope work was routine. Because Baker Tilly did work the letters expressly excluded without writing a new letter, the court treated unwritten engagements as a regular part of the relationship, not a one-time lapse.
• "Dispute," not "controversy." Baker Tilly "further undermined its credibility," the trial court found, by saying the Wisconsin work came from a "dispute" rather than a "controversy" and insisting it never provided tax controversy services. The firm's own website markets tax advocacy and controversy services.

Because these are findings of fact made after an evidentiary hearing, the appellate panel asked only whether they were against the manifest weight of the evidence. It found they were not. That standard is very hard to overcome on appeal, and it is the main reason the firm's interlocutory appeal failed.

The procedural path: granted, reconsidered, denied, affirmed

The case went through several stages before the September 25 order, and each one helps explain the outcome.

Stage	Court	What happened
Malpractice complaint	Circuit Court of Cook County	Weber and PIL sue Baker Tilly and Bivens for accounting malpractice
First ruling	Circuit Court of Cook County	Motion to compel arbitration and dismiss granted
Reconsideration	Circuit Court of Cook County	Weber's motion to reconsider granted; evidentiary hearing held; additional briefing ordered
Second ruling	Circuit Court of Cook County	Motion to compel arbitration denied
Interlocutory appeal	Appellate Court, First District	Baker Tilly appeals as of right under Rule 307(a)(1)
Decision	Appellate Court, First District (Fifth Division)	Affirmed, September 25, 2026, No. 1-25-1001

Two points stand out. First, the trial judge changed course. The first ruling sent the case to arbitration based on the papers. The second, which denied arbitration, came only after live testimony. Second, the appeal was available immediately. Under Illinois Supreme Court Rule 307(a)(1), an order granting or denying a motion to compel arbitration is treated as injunctive, so either side can appeal it right away without waiting for final judgment. The appellate court confirmed its jurisdiction on that basis.

How Coinbase v. Suski shaped the ruling

The strongest part of the order is on who decides. Baker Tilly argued that the letters sent all disputes to an arbitrator, including disputes about scope. The arbitration terms incorporated rules giving the arbitrator "the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement." Courts have often treated that kind of Incorporation of Provider Rules as the "clear and unmistakable" evidence of delegation that First Options of Chicago, Inc. v. Kaplan (1995) requires. When a valid delegation exists, Henry Schein, Inc. v. Archer & White Sales, Inc. (2019) bars a court from deciding arbitrability itself, even if it thinks the argument for arbitration is "wholly groundless."

The Illinois court did not question any of that. It asked a narrower question: which contract is the delegation in? In Coinbase, Inc. v. Suski, 602 U.S. 143 (2024), a unanimous Supreme Court, in an opinion by Justice Ketanji Brown Jackson, held that when parties have two agreements, one sending arbitrability to an arbitrator and another that explicitly or implicitly sends disputes to court, a court must decide which agreement governs. A delegation clause cannot answer that question for itself, because the question is whether the parties agreed to the delegation in the first place.

Weber applies the same reasoning to an unwritten second contract. The order concluded that the letters "showed an agreement to arbitrate arbitrability for work performed within the scope of the letter," but that "it is not clear with respect to the parties' unwritten agreements." With two contracts carrying different arbitrability terms, the court decided which governed, and Baker Tilly had the burden of showing that its arbitration clause reached the disputed work. It did not meet that burden.

The state statute points the same way. Section 1 of the Illinois Uniform Arbitration Act, 710 ILCS 5/1, makes "a written agreement to submit any existing controversy to arbitration," or a provision in a written contract to arbitrate future controversies, valid and enforceable. An oral contract with no written arbitration term gives the Act nothing to enforce. Under the Federal Arbitration Act (FAA), Section 2 likewise applies to a "written provision" in a covered contract.

Does the Baker Tilly ruling set precedent?

Not formally. The order was filed under Illinois Supreme Court Rule 23, so it is not precedential. Since the rule was amended in 2021, however, nonprecedential orders entered on or after January 1, 2021 can be cited for persuasive purposes. Expect to see it cited in scope disputes involving professional-services firms, and in any case where a party tries to stretch an older arbitration clause over a later, informal relationship.

Its persuasive value comes from how closely it follows Coinbase. Nothing in the order depends on accounting-specific doctrine. The same analysis would apply to a law firm's Retainer Agreement, an IT consultancy's statement of work, or a consumer platform's terms of service that sit alongside a separate promotional contract.

What it means for businesses that rely on arbitration clauses

For professional-services firms, including accountants, law firms, consultants, and engineers, the lesson is practical. An arbitration clause protects only the work the engagement letter covers. Standard letters that carve out "other services" and require a separate letter for them work against the firm when that separate letter is never signed. The more complete a firm's scope exclusions, the more of its later work falls outside its own arbitration clause. Accounting-liability insurers have long advised firms to choose dispute-resolution terms deliberately. Weber shows those terms fail when the paperwork does not keep pace with the work.

For drafters of consumer and employment clauses, Weber is a smaller-scale version of the problem Coinbase created. A company with a master user agreement containing a delegation clause, plus sweepstakes rules, loyalty-program terms, or product-specific terms that say something different, cannot count on the master clause to settle disputes under the other documents. Courts will decide which contract governs. The fix is drafting: every side agreement should expressly incorporate the master arbitration terms or deliberately carve them out.

For defendants weighing whether to move to compel, the procedural history is a caution. Baker Tilly won the first round on the papers and lost after an evidentiary hearing. Once a court holds a hearing on whether a contract was formed, the result depends on testimony, and a witness who insists that no work is ever done without a written agreement, with no such agreement to show, can hurt the motion.

What it means for claimants' counsel and the plaintiffs' bar

For plaintiffs' lawyers facing a Motion to Compel Arbitration, Weber offers a clear line of argument:

• Map the claim against the scope clause. Match each act of alleged misconduct to the contract language, as the trial court did here. Scope exclusions in the defendant's own template are strong evidence.
• Ask for an evidentiary hearing. Contract formation is a factual question. Under the Illinois Act and the FAA alike, a real dispute over whether an agreement exists supports a hearing or a trial on that issue.
• Invoke Coinbase early. When there is a second agreement, written or oral, argue that the court must decide which one governs before any delegation clause applies.
• Look for the defendant's own marketing. Baker Tilly's website undercut its claim that it did not provide tax controversy services. Public descriptions of services can be persuasive evidence.

The same arguments apply at scale. In Mass Arbitration and mass-claim litigation, businesses often rely on a single master arbitration agreement to cover many claimants and several related contracts. Weber shows that a missing or mismatched document can defeat a motion to compel even for a sophisticated firm dealing with one client of 40 years.

What happens next in Weber v. Baker Tilly?

The malpractice case now returns to the Circuit Court of Cook County to proceed in court. Baker Tilly could seek leave to appeal to the Illinois Supreme Court under Rule 315. Petitions for leave to appeal are discretionary, and a nonprecedential order resting largely on fact findings reviewed for manifest weight is not an obvious candidate for review. Unless the Supreme Court takes the case, the parties will litigate the malpractice claims themselves, including the standard of care, causation, and whatever damages the plaintiffs can connect to the Wisconsin assessments.

FAQ

What is the Baker Tilly arbitration ruling?

It is the Illinois Appellate Court's September 25, 2026 order in Weber v. Baker Tilly US, 2026 IL App (1st) 251001-U. The order affirmed the denial of Baker Tilly's motion to compel arbitration of an accounting malpractice suit because the engagement letters' arbitration clauses did not cover the excluded Wisconsin tax work at issue.

Can an arbitration clause in an engagement letter cover work outside the letter?

Not automatically. In Weber, the court held that the letters' arbitration and delegation terms applied to work within their scope. Work the letters expressly excluded was governed by a separate oral contract with no arbitration term, so the clause did not reach it.

Who decides arbitrability when there are two contracts?

A court. Under Coinbase, Inc. v. Suski (2024), when one contract delegates arbitrability to an arbitrator and another does not, the court decides which contract governs. Weber applied that rule where the second contract was unwritten.

Is Weber v. Baker Tilly binding precedent in Illinois?

No. It is a Rule 23 order and not precedential, but under Rule 23(e)(1) it may be cited for persuasive purposes because it was entered after January 1, 2021.

Can a malpractice claim against an accountant be forced into arbitration?

Yes, if the client signed a written arbitration agreement that covers the services at issue. The Illinois Uniform Arbitration Act and the Federal Arbitration Act both enforce written arbitration provisions. Weber shows the firm has to prove the clause actually reaches the disputed work.

What happens next in the Baker Tilly case?

The malpractice claims return to the Circuit Court of Cook County to be litigated in court, unless Baker Tilly obtains discretionary review from the Illinois Supreme Court.