Big Four v Big Law: EY Bolsters its Legal Service Offering with Thomson Reuters Deal
April 30, 2019
2 min read
What's going on here?
Ernst & Young (EY) has acquired Thomson Reuters’ Pangea3 Legal Managed Services (LMS) to bolster its legal offering. The acquisition gives EY an extra 1,200 staff spread over 3 continents.
What does this mean?
Pangea3 is a leading legal outsourcing services company which aims to reduce costs for law firms. The company (which launched in Dubai in 2005) specialises in litigation, contract lifecycle management and financial trade documentation. It was previously bought by Thomson Reuters in a $100 million deal in 2010. Now, the award-winning legal outsourcing company has been acquired by EY, a member of the Big 4 accountancy firms. This follows on from EY’s acquisition of Riverview Law (an alternative legal services provider) in August of 2018 and grows EY’s law practices to 2,400 lawyers strong across 84 countries.
What's the big picture effect?
Why is EY investing so much into its legal services? Right now, the battle of the titans is taking place between the Big 4 as they aim to offer clients increasingly “holistic solutions,” as explained by Mark Weinberger (EY’s CEO). The starting shot was fired by PwC when it became the first of the Big 4 to obtain its Alternative Business Structure licence (ABS licence) in 2013. The ABS licence essentially allows non-lawyers to have a financial stake in a law firm. EY and KPMG quickly followed suit. Deloitte was the last of the Big 4 to reach this stage, obtaining its ABS licence in 2018. Yet Deloitte wasted no time in hiring Michael Castle, former Allen & Overy banking partner as its new UK legal head in January 2019.
The legal industry has always kept an eye on the increased threat from the Big 4. In 2016, the Law Society warned that services offered under ABS licences would only impact “lower value legal services to business”. But following Deloitte’s ability to steal partners from Magic Circle firms, a second battlefront is emerging between the Big 4 and the Magic Circle.
Both big law and accountancy firms have long spoken of holistic solutions, but now they’re taking action. Magic Circle firms rely heavily on their reputation in the legal world to set them apart from new market entrants. While they might discount the impact of the Big 4’s foray into legal services, it is now undoubtedly ambitious and well-funded. Will underestimating their power prove a costly mistake for law firms? Or are the Big 4 bidding to master an industry beyond their grasp?
Certainly, this power dynamic is one for law firms to keep their eyes on.
Report written by Will H
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