Ernst & Young LLP will announce more deals shortly as it bolsters its legal advisory and managed services operations worldwide.
“We’re probably the leading alternative law provider globally,” EY’s global law leader Cornelius Grossmann said in a phone call. “We’ve built up our presence through acquisitions and will look for more—this is a fast growing area and we couldn’t rely on organic growth alone.”
Grossmann said the upcoming acquisitions in its legal advisory side will be “generally outside of Europe, where we have historically had a strong presence.”
EY acquired legal outsourcing business Pangea3 from Thomson Reuters Corp. April 4.
“We’re buying the expertise and the people, as well as one of the pioneers in managed legal services,” Grossman said. Pangea3 will help build EY’s presence in automating services for in-house lawyers at large corporations. Pangea3 has 1,000 professional staff in eight offices globally.
EY in August 2018 bought another technology-led firm, U.K.-based Riverview Law. “Riverview brought us useful technology,” Grossmann said.
Riverview is a relatively small firm with around 100 staff but has a strong technology presence, using software from U.K.-based Kim Technologies Ltd. to automate the delivery of legal services, especially for in-house legal teams.
EY bought a 10-year license from Kim Technologies, which specializes in in workflow and knowledge management using artificial intelligence.
“There are two sides to our legal business,” Grossmann said. “We’re a leader in automation, and can use EY’s international network to grow this, although we won’t sell to audit clients.”
The other side is legal advisory, concentrating in the financial services area. EY says it isn’t competing head on with established law firms. “We don’t do litigation, which is a big part of the law business,” Grossmann said.
EY is turning itself into a multi-disciplinary legal advisory firm, offering clients a one-stop shop for legal as well as tax and accounting services.
“We already have a very strong global presence, with 2,400 lawyers in 84 countries,” Grossmann said, “but there are some gaps, for example in Asia-Pacific.”
The Pangea3 acquisition was done through EY’s global arm, Grossmann added, showing that expanding the legal side is being pushed firm-wide. “It is a strategic priority for our tax arm, giving us global impetus,” Grossman said.
The announcement of deal sparked a lot of attention from the legal industry and legal tech experts, which are anticipating more expansion in the sector by EY and its fellow Big Four accounting firms.
The acquisition of Pangea3 “suggests EY is serious about its plans to expand in the legal market,” said Ron Friedmann, a legal tech blogger and chief knowledge and information officer with LAC Group, a research, library, and spend management provider.
Friedmann noted how the purchases of Pangea3 and Riverview Law included some overlap but primarily could be seen as complementary in terms of the companies’ respective management structures and the products and services they offer.
But while acknowledging the importance of EY’s acquisition, he cautioned against declaring the Big Four and alternative legal service providers the winners of the legal industry arms race just yet. The Pangea3 deal is just one of many proposed and closed deals involving alternative legal service providers in the last couple years, he pointed out.
“EY, Elevate, and UnitedLex all say, ‘we’re making big investments in legal tech,’ and it’s true. But so are law firms,” he said.