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Deloitte, Epstein Becker Alliance Hit Overdrive During Covid-19

Nov. 10, 2020, 9:45 AM

When Deloitte inked a partnership with workplace law firm Epstein Becker Green last year, skeptics wondered whether the two could compete with Big Law. Then Covid hit.

With furloughs and layoffs devastating the economy and remote work a new normal, labor and employment practices have benefited more than almost any other expertise, as corporations sought to navigate a patchwork of state and federal rules. Luis Fernando Guerra, the Madrid-based global leader for Deloitte Legal Services, said the virus has been an “accelerator” for business.

“Suddenly, millions of people, they left their offices and were now working from home—so the needs of our clients increased significantly,” Guerra said. “We were prepared, absolutely prepared, to be in the best position to provide global responses.”

Deloitte’s legal practice has referred about 110 clients to Epstein Becker since the collaboration began 18 months ago, officials said. Most matters have been workforce related, but the New York-based law firm also assisted Deloitte and its clients with health care, life sciences, and corporate issues.

In exchange for “preferred provider” status in the U.S., the law firm has introduced more than 20 of its existing clients to Deloitte for overseas legal work. The pair has jointly bid for large new clients that neither could have signed alone because of geographic limitations, officials said.

‘Simply Good Business’

The success of the nascent arrangement, the details of which have largely remained private, makes similar partnerships more likely at other firms, said Susan Hackett, CEO of the consultancy Legal Executive Leadership and former general counsel of the Association of Corporate Counsel. That’s especially true as states like Arizona and Utah move to relax law firm ownership regulations.

“What surprises me is why this is only one of a few examples of such partnerships in play,” Hackett said. “We’ve not seen a lot of law firms engage in this kind of broad-sweeping arrangement. But for those who see a common opportunity, it’s simply good business.”

The “Big Four” consulting firms like Deloitte have been muscling into the legal market, adding thousands of staffers and threatening to steal contracts from companies that are already familiar with their consulting and accounting arms.

So far, the other players remain unconvinced they need a law firm partner to win. KPMG International favors targeted alliances for technology and services aimed at helping in-house counsel, said Stuart Fuller, KPMG global head of legal services.

“Globally, the need for a range of services and technology solutions for in-house legal departments have made this area one of the fastest-growing in the firm,” Fuller said. KPMG works with Microsoft and Thomson Reuters, among other clients.

Investments in legal tech, data analytics, and consulting have positioned the accounting behemoths as allies to in-house counsel with high-volume legal needs, said Marcie Borgal Shunk, president of the Tilt Institute, a law firm consultancy.

For law firms, the deals can be unnerving for reasons “ranging from legitimate concerns about ethics and the sanctity of the profession to purely emotional reactions such as fear,” Shunk said. “It is a scary proposition to allow other people to take the reins.”

Shared Client Lists

At first the partnership meant trips between Europe and New York for meetings and dinners. The trips ended when coronavirus hit, but Guerra, Epstein Becker Managing Director Jim Flynn, Chief Operating Officer Steven Di Fiore, board member David Garland, and others meet virtually every other Thursday morning.

The organizations also created a digital “collaboration platform” to communicate about clients, said Guerra.

They’ve even shared client lists—almost unheard of between Big Law and Big Four operations, which also include EY and PwC—to determine which business opportunities to pursue together. Between them, the firms represent several top companies, according to Bloomberg Law docket listings. Pier 1 Imports Inc. lists Deloitte as counsel in a bankruptcy filing, for example, and Epstein Becker represents Credit Suisse, Allstate, and WeWork.

“I found this super refreshing, as their client list is a lot more valuable than ours is,” said Di Fiore, who worked from 1988 to 1998 at what was then called Deloitte & Touche.

Flynn said attorney-client privilege obligations have not become an issue.

The pact has yielded several joint bids for new work. In one, a large consumer products company sought to conduct an employee pay equity study that looked at gender and other metrics, “to make sure that they’re doing the right thing,” Di Fiore said.

The company—which the firms declined to identify—has 25,000 employees, half in the U.S. It initially awarded the work to a large law firm, but that arrangement faltered and the company chose the Deloitte/Epstein Becker bid, Di Fiore said.

“We wouldn’t have gotten in without having this arrangement with both Deloitte’s human capital consulting, as well as Deloitte Legal, to do this worldwide,” he said.

Deloitte has been extending its network of legal practices, buying a London law firm and expanding in Italy and Mexico.

Going ‘Nonstop’

Both firms declined to quantify the partnership’s value. Di Fiore said Epstein Becker’s revenue has grown 15% to 20% over the last few years, partly through this deal.

Epstein Becker also benefited from publicity.

Erika Collins, formerly co-chair of Proskauer Rose’s international labor and employment practice, called Garland at Epstein Becker the day the partnership was announced. The chance to co-lead a similar practice at Epstein Becker was the main draw, she said.

Collins said she’d seen Big Four legal teams on the other side of international deals and wanted to work alongside Deloitte. The move was quickly accompanied by a workload she hadn’t seen since her days as an associate with Cooley Godward Kronish in Silicon Valley during the dot-com boom, she said. “It’s just been nonstop.”

To contact the reporter on this story: Sam Skolnik in Washington at sskolnik@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; Gregory Henderson at ghenderson@bloombergindustry.com

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