TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, August 13, 2018

EY (With 2,200 Lawyers) Seeks To Disrupt BigLaw With Acquisition Of Alternative Legal Services Tech Company—Tax Law Practices Are Most At Risk

EYRAmerican Lawyer, The Big Four’s Recent Acquisition in the Legal Market is a Big Deal:

There has been much talk in the past year that the Big Four were sniffing around the alternative legal services (ALSP) market looking for an acquisition. Many legal market watchers, including your (humble) analyst, publicly stated that they expected at least one Big Four-led acquisition into the ALSP space in 2018. That wait is now over. EY announced on August 7th that they will acquire Riverview Law, a UK based provider of both managed legal services and technology. ...

EY’s acquisition of Riverview Law has the potential of shaking up the ALSP market in two important ways. First, it may help facilitate increased acquisitions within the space. ...

There is a second, potentially more important, reason why the Riverview acquisition is important in this space. Managers of existing ALSPs now face the daunting task of competing with a Big Four player. EY will be a fierce competitor for several reasons. Its size — at $31bn in revenue and 250,000 employees worldwide — is certainly important. Its client base and strong capabilities in process management will also be key. But most important is their brand. Trust is incredibly important in the legal services market — even in the lower value areas in which ALPS compete. Law departments, as the leading purchasers of legal services, are fundamentally in the business of risk mitigation. While the cost of service is important, so is the credibility of the vendor, and this is particularly true for ALSPs. By hiring an “alternative” provider law departments are taking two risks — first, that this new “alternative” approach can work and second, that the ALSP in question is the right vendor in the space. EY’s strong brand equity and familiarity, coupled with existing relationships with clients make them much better placed to make this argument to corporate leaders than Axiom, Elevate, UnitedLex or any of the other leading ALSPs. The Big Four have the unique benefit of being seen as a “safe pair of hands”. This will be a key competitive advantage.

EY

When you combine these two forces the Riverview acquisition looks like it may be an accelerator of consolidation in the ALSP space. The increased competitive pressure on ALSPs due to the continued expansion of the Big Four combined with the increasing ease of selling an ALSPs due to the precedent that the Riverview transaction sets may usher in a wave of transactions over the coming years which will fundamentally transform this section of the legal market.

 

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Comments

I thought this sort of structural change in the legal industry was unpossible now and forever in the future because reasons.

/sarc

Posted by: Unemployed Northeastern | Aug 13, 2018 2:26:02 PM