BIG SIX accountancy firm Price Waterhouse is set to take on City lawyers by establishing a legal practice this spring.
The move could be the tip of the iceberg, with two other top accountancy firms rumoured to be going down the same path.
The Price Waterhouse decision, described as a “terrifying prospect” by one City firm, is scheduled to occur on 1 April.
Chris Arheim, head of Hammond Suddard's corporate finance department, will run the firm, which will be housed in self-contained offices in Price Waterhouse's London Bridge building. The tax department is spearheading the move.
A spokesman for Price Waterhouse would only say: “This market-driven development will enhance our existing network of independent legal services across Europe.”
An insider said the firm had been “keen to do this for some time” and was spurred on by Labour's positive views on multidisciplinary partnerships.
But another reason was “defensive”. The tax practice does tax planning for mergers and acquisitions but does not get involved in implementation.
The source said the new firm could do all this work to compete with top City firms. It will be part of Price Waterhouse's international network of law firms and profits will be put back into the network in accordance with Law Society rules.
Ten lawyers will be recruited in the first year, with 50 envisaged after four years. It intends to concentrate on corporate finance work such as M&As, venture capital, buy-outs and buy-ins and flotations.
However, it will buy-in specialist legal services. “The new firm is not going to recruit pensions or IP lawyers. It will contract out this work subject to assurances that it would not pinch their staff and they wouldn't pinch the firm's [PW] clients,” said the source.
Rumours that Coopers & Lybrand is to follow suit were denied by the accountancy firm although a spokesman said it had conducted an international review of its strategy on providing legal services.
The review said the firm would aim to support some of its core services with legal skills where appropriate.
Commenting on the move, Cameron Markby Hewitt senior partner John White said: “They are very effective in setting up on the continent and there is no reason to believe that it will not happen here. Firms will have to fight back.”