EY’s John Knox has a new job with an ambitious mandate: grow his part of the massive Big Four accountancy’s legal division—fast.
“Our plan is to double, triple, quadruple the size of our business pretty quickly,” Knox, who took over July 1 as EY’s new global legal managed services leader, told Bloomberg Law. That starts with doubling legal managed services revenues over the next 12 months, he said.
Knox’s plan is the latest sign that the Big Four—including Deloitte, KPMG, and PwC—and other alternative legal service providers are making a play for a larger piece of a market traditionally dominated by law firms. That comes as some states are considering changes to law firm ownership rules that could open the door.
Deloitte last month unveiled a new U.S. Legal Business Services practice, which will work with in-house legal offices to streamline functions that track client contracts, invoices, eDiscovery, and other functions.
Knox said EY’s legal managed services unit is focusing on many of the same services, including by offering a range of contract lifecycle management tools. The U.S. will be key to its plans, given that it’s the largest legal market in the world by a healthy margin.
The company in recent years purchased the legal managed services business Pangea3, and the U.K.-based law firm Riverview Law. Together, the acquisitions have bolstered EY’s capabilities in process engineering, contract services and regulatory risk assessment. Both units report to Knox.
Knox’s division—which primarily focuses on helping large and medium-sized in-house legal departments streamline and automate their legal services—now comprises more than 1,100 employees globally, out of a larger group of roughly 3,500 attorneys and other workers.
Knox, based in Singapore, conceded that his division, and EY’s legal efforts generally, are just a small slice of the accountancy giant’s overall business, which includes tax, consulting, and audit services. Last September, EY announced record combined global revenues of $36.4 billion for the financial year that ended in June of 2019.
Knox declined to provide details regarding his unit’s overall revenues. He said future growth would be more likely to come via “building organically” than through additional large-scale acquisitions, but that both options are on the table.
‘We’re Leading This Market’
Knox also declined to comment specifically about Deloitte’s efforts in the legal services market. He said EY is already the largest provider of those services among its most direct competitors.
“We’re leading this market among the Big Four in scale and sophistication of services,” said the Australia native. “That said, we take our competition very seriously.”
Late last year, EY Law rose to the top spot in a worldwide survey of legal service provider brand recognition.
Like other Big Four legal shops, EY has grown in recent years in most global regions. In China, for example, EY announced last year it had merged with local firms based in Hong Kong and the tech hub of Shenzhen.
EY, formerly known as Ernst & Young, is also monitoring what the company says are shifting priorities for legal managed services providers and their clients. Corporate clients recognize that cost-savings, while important, may be less valuable in the long run than improving their understanding and management of the data they possess, EY said in a recent report.
Here Comes the Big Four
EY, like the others in the Big Four, have long been unable to own or co-own traditional law firms, or other sorts of legal advisory operations, in the United States, because of state-level ethics rules.
Rule reform efforts in California, Arizona, and Utah could hasten the entry of the Big Four more fully into the American legal market. That scenario has made some Big Law firm leaders anxious in recent years, given the accounting companies’ comparatively massive revenue streams, their strong tech focus, and their fast growth in legal markets in other global regions.
“We’re keeping an eye on, and thinking through, what opportunities might present themselves down the road,” Knox said. “It’s something we’re watching, something we’re interested in.”