Accounting firms make big moves in Canadian legal market

Big news this week as both EY and Deloitte upped their presence in the Canadian legal market. EY added business law services and Deloitte affiliated with Conduit Law, a rising NewLaw star. I had the pleasure of being interviewed by Michael McKiernan of Law Times last week for this article and provided by comments on these groundbreaking developments.

A couple of quotes from the article:  “That’s a big move, because none of the other big accountancy firms are doing business law in Canada. They have all spent the last 15 to 20 years out on the periphery doing tax and immigration law, and maybe a bit of trade law. Now EY is moving to the centre, which sets the stage for a big change in this country,” Cameron says. “Law firms should be afraid, very afraid. We’ve all been waiting for it, and now it seems like the accountants finally actually are making their move.”…“Canada and the U.S. are lagging for various reasons, but legal work is very lucrative, and the accountancy firms are always looking for ways to add to the billions in revenue they already have globally,” Cameron says. “I expect if this works for EY, then it’s going to work for all the big accountancy firms in Canada.”

I did my interview the week before Deloitte announced its acquisition of Conduit Law, so my prediction above came true within just a few days of the interview. I expect that other large accounting firms in Canada will be following suit shortly, and this will put further pressure on Canadian business law firms of all sizes. Initially, I expect the impact will be strongest on small and midsize law firms, as the accounting firms build their business law services infrastructure, but eventually large Canadian law firms will be impacted as well as the accounting firms battle for large M & A and corporate work.

The Big 4 accounting firms are actually global multidisciplinary entities that are much larger than the largest global law firms. They have the resources to dominate the legal services industry if they want to. Legal firms of all sizes must now prepare a powerful response to protect their market share or join the accountants through mergers or affiliations. In fact, I expect we will see a new wave of mergers and affiliations occurring between law and accounting firms in response to these developments.

 

DLA Piper merges with Davis LLP in Canada. Who’s next?

This merger was big news in Canada this week. Another Tier 2 firm merging with a global giant. Which begs the question, which large Canadian law firm will be merging next? Momentum is building for global matchups, since Tier 2 firms are now able to compete with Tier 1 “Seven Sisters” firms such as McCarthy’s, Blakes, etc. with a simple flick of the “Verein switch”. Which of the “Seven Sisters” will finally succumb to the lure of a global merger in response?

Stay tuned for more merger action in the next couple of years, as competition heats up for Canada’s lucrative resources and financial industry legal work.

 

 

 

 

 

 

 

The Dentons – Dacheng blockbuster merger

News of the Dentons – Dacheng deal was announced this week and I was asked to provide my comments in the attached Globe & Mail article. This merger creates the largest law firm in the world by head count at over 6,500 lawyers and will have major ramifications for all global and Canadian law firms operating in China on inbound or outbound deals. In my opinion Dentons has scored a tremendous coup here. The Verein structure has been used by other global law firms before but this deal takes it to another level. In one fell swoop, Dentons has beaten other global law firms and accounting firms such as PwC to the punch for China-related legal work using the same verein structure the accounting firms used to such potent effect in building their own global entities. Here’s another article on the deal in the American Lawyer that provides further background.