Andersen Legal Australia suffered the same fate as Garretts last week when it was ditched by Andersen accountants who have opted for a merger with Ernst & Young without their affiliated law firm
Andersen Legal is now believed to be talking to other law firms. When Ernst & Young stepped in at the beginning of April, it appeared that Andersen Legal had been spared the prospect of finding its own merger partner. Andersen's main alternative to Ernst & Young was Deloitte Touche Tohmatsu, which stated publicly that it had no interest in acquiring a legal practice. Ernst & Young, however, has its own infant legal arm and the firm's chief executive officer Brian Schwartz indicated that he was interested in most of Andersen Australia, including the legal practice. Andersen Legal was due to sign a separate merger agreement with Ernst & Young, which has a 30-lawyer legal arm of its own. The reasons behind Ernst & Young's decision to pull out are unclear. However, Andersen Legal managing partner Adrian Ahern said in a statement: "Unfortunately, Ernst & Young withdrew from negotiations for internal policy options. We are now pursuing other options." Andersen Australia wanted to keep all of its professional services departments together, but was also forced to ditch its consulting practice to secure the merger with Ernst & Young, which sold off its own consulting practice to Cap Gemini two years ago. Andersen Legal counted Andersen as its largest client, but has a well-regarded second-tier corporate and commercial practice. It has also made some impressive lateral hires from top Australian firms in the last two years. However, with 150 lawyers, the firm is large, and now faces an uphill battle to do a single merger or two or three department-wide deals before defections begin.