The future of Andersen Legal's Australian firm has been secured by an Australian merger between Andersen's accounting arm and Ernst & Young. Most of the Andersen Legal staff will join the merged firm, which will operate under the Ernst & Young banner. The firm looked under threat when talks between KPMG and Andersen broke down, making a deal with Deloitte Touche Tohmatsu likely. The deal between Andersen and KPMG fell down partly over conflict issues on the HIH liquidation. KPMG is working for the Australian government to investigate the insurance company's collapse last year, which may include a consideration of Andersen's role as HIH auditor. Deloittes' Australia chief executive had stated publicly that he would prefer to ditch the legal arm in favour of relationships with major independent firms. However, Deloittes pulled out of merger talks last Thursday (28 March). The Ernst & Young deal is subject to due diligence and regulatory approval, but if it does go through, the Andersen Legal partners will be taken on. Ernst & Young chief executive officer Brian Schwartz said the only part of Andersen he did not want was the consulting business.