Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

EY is restructuring its UK legal arm, sparking a fresh round of job cuts and hastening the Big Four firm’s retreat from its previous ambition to take a bigger slice of the lucrative sector.

In a hastily convened 12-minute call on Tuesday, EY partners told the firm’s UK lawyers that the firm was overhauling its legal business and launching a redundancy consultation, three people with knowledge of the matter told the Financial Times. 

About 30 of the roughly 160 people employed by EY’s UK law business would be affected by the job cuts, said one close to the firm. Some jobs would be moved to hubs in Manchester and Belfast, according to another person with knowledge of the call.

While many in the industry predicted that the Big Four accounting and consulting firms — EY, Deloitte, KPMG and PwC — would disrupt the market when they set up legal practices a decade ago, the group’s inroads have been limited.

EY’s redundancies follow previous job cuts at its UK legal business, which sits within the firm’s tax division. This included the closure of EY Riverview Law, which involved laying off most of the staff at the Manchester-based business that the accounting firm purchased in 2018. 

EY’s legal arm has shrunk in recent years, with the practice included in a round of 150 job cuts in December 2023, which also affected EY-Parthenon, its strategy and transactions business.

Cuts have continued across the firm in the past year as the consulting sector battles a wider slowdown and rising costs. EY employs 20,000 people across its UK businesses including tax, audit and consulting.

EY said it had “put forward proposals to restructure the UK law business, by focusing on strategic areas with greater alignment to the broader EY business and providing integrated services to our clients”.

The restructuring will boost EY’s legal capabilities in corporate law, company secretarial, tax litigation and immigration but would “regrettably, result in a reduction of roles across other areas of the UK law business”, firm said.

EY’s push into legal services started in 2014 when the Big Four firm was granted a licence to operate as an alternative business structure (ABS), a set-up introduced in the UK in 2011 to allow non-lawyers to own and manage law firms and lawyers. KPMG and PwC also obtained ABS licences that year.

As part of EY’s “Project Everest”, a plan to split the audit and consulting divisions globally, the accounting group looked at significantly expanding its legal practice and held talks in 2022 with a number of UK law firms about potentially combining, according to one person with knowledge of the discussions.

Everest, which would have liberated EY lawyers and consultants from conflict of interest rules that prevent them from representing the firm’s audit clients, was ultimately abandoned in 2023. 

Despite the lack of success in the UK, some of the Big Four are now looking at opportunities in the US as the market opens up.

KPMG became the first of the group to have a licence to practice law in the US approved after the Arizona Supreme Court greenlit its application in February.