Dealing with the legal liabilities, underlined by Andersen being named on Friday as a party to a class action by aggrieved HIH Insurance shareholders, is one headache, while partners are still to vote for the deal announced just before Easter.

A source close to the deal said there was increasing confidence that the protracted due diligence process would soon be completed, with these matters resolved.

But it was far from a sure thing that partners would back the deal, the source said.

An information pack will be put together for both sets of partners to vote on whether the takeover should proceed. It would add 2300 partners and staff to Ernst & Young's ranks. The vote is expected to be held in mid-May.

Liabilities to be "ring-fenced" so that they are not transferred from the Andersen partnership to the E&Y partnership include those related to HIH and others dating as far back as Bond Corp. They also include entitlements to Andersen employees.

Andersen partners are expected to make a payment to E&Y to become part of the enlarged E&Y partnership.

If the takeover does not proceed, it is thought that Deloitte would be eager to restart talks or the remaining four big firms would merely "cherry-pick" key partners.

Industry talk suggests that one problem is that key clients may be reluctant to shift to E&Y, thus undoing the main reason for the deal.

But News Corp announced last week that it would switch to Ernst & Young, despite potential conflicts as current auditor to Publishing & Broadcasting and John Fairfax. BHP Billiton, Andersen's other lucrative client, has put its external audit out to tender.

One of Andersen's biggest Queensland audit clients, Technology One, said at this stage the company would be sticking with the new merged entity.

"We have always been happy with Andersen and the job they did," executive chairman Adrian Di Marco said. "Our intention is to stay with the audit team. I just think it's very easy to overreact."

Mr Di Marco said it had not been discussed if Andersen's auditors would continue to work for his company under Ernst & Young but ``we don't want to see all the knowledge built up on our business disappear. We would like to see at least some of the team stay the same.

"I think it's a fact of life the big auditors reduce in number. There's going to be some conflict of interest and they have to manage that. To be honest, if they are auditing a competitor that's positive because they will have a better understanding of the industry."

A spokeswoman for David Jones said: "At this stage, it would not be our intention to [change] but if something in the process indicates that we should do it, we will do what's best for the business."

David Jones employs Deloitte as "internal auditors" undertaking functions such as tracking stocktakes but Andersen is the external auditor which signs off the retailer's accounts.

E&Y's big audit clients include AMP, Commonwealth Bank, Telstra, Coca-Cola Amatil, Carter Holt Harvey, Wesfarmers and Woodside, while Andersen's include CSL, Computershare, Futuris Corp and Tabcorp. Coming in 48 Hours.