EY Restructures UK Legal Arm Amid Job Cuts
Ernst & Young (EY) is undergoing a significant restructuring of its legal division in the UK, which includes a new round of job reductions. This move reflects the firm’s shifting focus away from previous aspirations to expand its presence within the legal sector.
Details of the Restructuring
In a brief 12-minute conference call on Tuesday, partners from EY revealed plans to overhaul its UK legal operations, directly impacting its workforce. Sources informed the Financial Times that approximately 30 of the firm’s 160 legal staff members are likely to be affected by the layoffs. As part of this restructuring, some positions will be relocated to hubs in Manchester and Belfast.
The Bigger Picture
Industry experts had initially anticipated that accounting and consulting giants such as EY, Deloitte, KPMG, and PwC would disrupt the traditional legal market when they established their law practices around ten years ago. However, success in this endeavor has been limited for these firms.
This latest round of job cuts at EY follows prior reductions within its legal arm. Notable events include the closure of EY Riverview Law and the significant downsizing of its Manchester-based operation, acquired in 2018. In December 2023, EY’s UK legal business was already part of a broader initiative that resulted in 150 job reductions, which also impacted EY-Parthenon, the firm’s strategy and transactions segment.
Context and Implications
As the consultancy sector faces a slowdown and escalating costs, EY has continued to implement workforce reductions across various divisions. Currently, the firm employs around 20,000 people across its UK operations, including tax, audit, and consulting services.
According to EY, the restructuring aims to bolster its capabilities in strategic areas such as corporate law, tax litigation, and immigration services. The firm noted that while the restructuring is essential for aligning services with broader business objectives, it will result in regrettable roles reductions within the UK legal department.
The Journey into Legal Services
EY’s foray into legal services began in 2014 when it acquired a license to function as an alternative business structure (ABS) in the UK, which empowers non-lawyers to manage and own law firms. Other firms such as KPMG and PwC similarly obtained ABS licenses that year.
Through “Project Everest,” a plan meant to separate its auditing and consulting operations globally, EY considered expanding its legal practice significantly. The firm engaged in discussions in 2022 with several UK law firms about potential collaborations. However, this initiative was ultimately scrapped in 2023, partly due to the conflicts of interest that prevented EY from representing its auditing clients.
Future Opportunities
Despite challenges within the UK market, some of the Big Four firms are exploring opportunities in the United States, where the legal landscape is becoming increasingly accessible. Notably, KPMG received approval from the Arizona Supreme Court in February to practice law in the United States, marking a significant milestone for the firm.
