Image credit: Reuters/Toby Melville
The line between law firms and accounting firms, as to where each sit on the spectrum of legal service delivery, just got a little more blurred recently when Ernst & Young (EY), an accounting giant and member of the Big Four, announced it had purchased Riverview Law, a UK-based alternative legal service provider (ALSP).
Legal market observers said the purchase allows EY to scale up its managed legal services offerings through its EY Law subsidiary, which operates globally. The new entity will be renamed EY Riverview Law, when the acquisition closes later this month. Karl Chapman, Riverview Law CEO, said the combination of the Riverview Law’s operating platform and tech-savvy people with the EY brand and clients, will allow the new entity to offer legal services on “a global scale”, which “is a winning formula for the legal market”.
Several legal industry experts told Thomson Reuters’ Legal Executive Institute the move by one of the Big Four accounting firms to hone in on legal services underscores several concurrent trends in the legal market and among legal service providers and ALSPs.
“Had there been any doubt that the Big Four is willing to spend time and money on the legal vertical, after this—there should not be”, says Bruce MacEwen, Publisher of Adam Smith, Esq. and a highly regarded legal industry consultant. He adds that this deal will no doubt “jump-start EY’s managed services business in this area”, while also bringing up the “existential question” of how much does the Big Four want to get into law?
“They have the human, financial, brand, and experiential capital to come after law land with the power of a freight train if they choose to do so”, MacEwen says. “It’s more a question of boardroom-level strategic priorities than questions of tactical capability”.
Lisa Hart Shepherd, CEO of global market research firm Acritas, agrees that the Big Four have a unique opportunity in legal. “They already have the relationships; the reputation for quality; and, their global footprint is extensive,” Hart Shepherd explains. “How easily this translates into being trusted for high-value legal work in a substantive way remains to be seen, although in some markets, particularly in Mainland Europe, the Big Four have already proven themselves”.
In fact, EY’s move comes amid several rounds of toe-dipping by accounting firms into the global legal market, most notably PricewaterhouseCoopers’ (PwC) announcement last September that it would open a law firm in Washington DC, called ILC legal. PwC said the new unit will not offer clients US legal advice, since it is prohibited from doing so, but instead would help US clients with international legal issues. Of course, ILC legal also is serving as a marketing arm to drive more business to PwC’s legal services network.
There is little surprise, then, that in a survey last year asking about the intrusion of ALSPs and accounting firms into the legal services market, more than two-thirds of law firm leaders said they were “very concerned” about that development.
It’s also little surprise that PwC’s brand among senior legal buyers has strengthened since launching ILC legal, Hart Shepherd notes, adding that EY also has a strong brand, particularly among younger legal buyers, and the Riverview Law acquisition likely will bring more attention to EY’s legal capabilities, with a particular focus on the more modern, tech-enabled ends of the legal market. “This will appeal to buyers who want more choice, with the reassurance of a brand with established board credibility”.
James W. Jones, a senior fellow at ‘The Center for the Study of the Legal Profession’, at Georgetown University Law, says he sees the Riverview Law acquisition as “an easy and relatively inexpensive way for EY to expand into the legal market and scale up through a brand that is already established, at least in the UK”.
“There wouldn’t seem to be much downside from EY’s perspective,” Jones explains. In fact, he adds, there is one intriguing way that this move could also be effective for EY in the US. “If EY were able to combine this platform with an Axiom-type model that involves the “placement” of lawyers rather than the formal offering of legal services, you could see the possibility for successfully skirting regulations in the US and effectively offering legal services under a different guise”.
Indeed, it’s thoughts like that which keep those in the legal industry up at night, MacEwen laughs. “If the Big Four were to come after traditional law firms, there is next to nothing a law firm can do to retain its historic share of routine-ish work”, he explains. “That may go from being a shrinking line of business for law firms to being one line of business that disappears entirely”.
Hart Shepherd agrees and hopes the Riverview Law deal spurs a round of introspection and action on the part of some law firms. “I hope this deal is a wake-up call to all the law firms who aren’t already planning for real change”. she says.
This article was originally published on Thomson Reuters’ Legal Executive Institute.
