EY cuts 30 legal jobs as Big Four’s legal dreams continue to fade

Up to 30 legal jobs are at risk at EY after the firm announced an overhaul of its legal business.

Partners broke the news to lawyers on a call on Tuesday, according to the Financial Times.

In a statement, EY said the changes would strengthen its corporate law, company secretarial, tax litigation and immigration capabilities but would lead to job losses elsewhere. A consultation process is now underway.

Recent struggles

The news is the latest sign of turbulence for EY’s legal division. It’s fair to say the firm has significantly rowed back on its legal ambitions in the UK amid a tough market for consulting firms.

Headcount has fallen to around 160 after a series of high-profile departures.

In December, an 11-lawyer energy and projects team left for US firm Hunton Andrews Kurth in London. In May, a five-strong technology team moved to Browne Jacobson. And in 2023, EY shut down Riverview Law, the legal outsourcing business it acquired in 2018 with high hopes of disrupting the legal market.

The Big Four's legal services reality check

EY isn’t alone in scaling back its legal aspirations. It’s part of a wider story about the Big Four struggling to disrupt the UK legal services market in the way they originally hoped.

PwC, Deloitte, EY and KPMG all launched legal arms after the Legal Services Act 2007 allowed non-lawyers to own and manage law firms. But despite big ambitions, they’ve struggled to gain serious market share.

Why is that? The key challenges include:

• Talent acquisition - Big Four partner profits are materially lower than the City's top law firms making it difficult to attract rainmakers.
• Conflicts of interest - Their vast audit practices limit the legal work they can take on.
• Cultural fit - Law has largely remained a secondary priority to audit, consulting and tax services.

The numbers tell the story.

Today, the Big Four are thought to hold just 0.7% of the overall revenue of the UK’s top 100 law firms, down from 1% in 2002. PwC’s legal revenue sits at around £77 million - well short of its £100 million target.

The KPMG exception

KPMG is perhaps the only outlier.

In February, it became the first of the Big Four to break into the US legal market, gaining approval to practise law in Arizona.

The catch is that it’s not allowed to do legal work for any of its audit clients. And that’s a long list - KPMG audits hundreds of Fortune 500 companies in the US.

How successful the move proves to be remains to be seen. As ever, the best work tends to follow the best lawyers, and KPMG - like the rest of the Big Four - has yet to prove it can consistently attract them.