Ernst & Young GC: Adding value

Along with the other world accountancy titans, Ernst & Young is considering launching a legal arm, says its GC for UK and Ireland, Lisa Cameron

It is not yet a racing certainty, but turf accountants are likely to have recently slashed the odds on one of the Big Four ‘professional services networks’ whacking in an application to transform itself into an alternative business structure (ABS).

At the beginning of August KPMG – the minnow of the Big Four, with a mere 150,000-plus employees and annual revenues of $23bn (£15bn) – dropped a strong hint that it was interested in effectively becoming an English law firm under the 2007 legislation. Rumours have also been floating around that PwC – the Big Daddy of the Big Four, has for some time been pondering an application. 


Indeed, only Deloitte ($31.3bn turnover) has remained schtum, as Ernst & Young (E&Y, $24.4bn) followed the KPMG statement with its own thoughts.

“We are keeping it under review and asking ourselves, does this make sense for us,” Lisa Cameron, E&Y’s general counsel for the UK and Ireland told The Lawyer. 

 Moving statement

That may not sound a tectonic moment, but against the backdrop of E&Y’s longstanding ambivalence on ABS, Cameron’s remarks represent a potentially profound policy shift.

“I’m not surprised by KPMG’s announcement,” comments Cameron, claiming E&Y executives had no forewarning of their rival’s statement, learning of it through press reports. 

“We’re constantly rung up by the Law Society asking us what we’re thinking,” she adds, highlighting anxiety at the solicitors’ English trade union body over which way the global accountancy behemoths might jump. “We’d expect that all the Big Four would consider the opportunities,” adds Cameron, while maintaining that if any did bag an ABS licence the move would not be as cataclysmic for international law firms as might be assumed. 

“I imagine that any Big Four firm that did get an ABS licence would be looking to practise law in discreet areas – tax, for example,” she says. “Some of that work can be similar to the advice already being given by those firms. International mobility could be another area – legal support to complement the work already being done by the Big Four.” 

Cameron has put in the time at E&Y, having joined some 15 years ago from the in-house team at US insurance company Chubb after a stint at RPC

With only a year under her belt at E&Y the business sold its management consultancy arm to Cap Gemini, meaning Cameron had to adapt her primarily insurance litigation background to handling a major piece of M&A work.

“I did my first and only all-nighter on that deal,” she recalls. 

Far more worryingly at the early stage of Cameron’s E&Y career came the 2001 crash and burn of what was Arthur Andersen. But while the Enron scandal sent shockwaves through the management of major audit and accountancy firms it bolstered the roles of their in-house legal departments.

“It concentrated minds here,” recalls Cameron. “It put increased focus on our role and on the infrastructure we needed to support our client-handlers.” 

In 2009, three years after taking the GC slot for the UK and Ireland, Cameron took over the role of managing partner of quality and risk management.

“For the legal team to be efficient,” she explains, “being part of that broader risk group works well. The work the legal team does is such an important aspect of risk management that if you were on the side you wouldn’t be linked into these important aspects. You want lawyers to be part of the team working on client acceptance, engagement, continuance – all the issues and commercial judgements client-handlers have to be thinking about.” 

Cameron, who reports to three managers – the general counsel for Emea, the risk management leader for that region and E&Y’s UK chairman – is keen to innovate in her dealings with external advisers. Having run a series of secondments for associates from E&Y’s “informal” panel firms she is extending this to partner level, with the first preparing himself for a stint in the legal department’s open-plan offices. 

“It’s helpful to have people in on secondment,” admits Cameron. “It lets them see the environment we operate in. It’s dynamic – you’re
really close to the enterprise and constantly juggling things.” 

While she wants law firm partners to get closer to the business Cameron is not as exercised as some in-housers over the billable hour.

“We have discount arrangements with firms,” she reveals. “If we’re talking about a big project we’ll discuss in advance what the fees will look like. But generally we don’t insist on anything but hourly rates – we’re not going out to external lawyers for commodity-type work. For me it’s not about just what the hourly rate is – it’s about the relationship with the firm. I’d expect my firms to be looking at ways to minimise their costs, which doesn’t necessarily mean a lower hourly rate.” 

Cameron describes her team of 10 qualified staff in the UK and another two in Ireland as “very lean”. She is recruiting for two posts, and surprisingly finding the market a bit sparse.

“It’s disappointing,” she comments. “I’m surprised we haven’t had a significant number of CVs from people we’d really want to interview, but we haven’t. I thought that movement was starting again in the City market, but perhaps I’m wrong.” 

Lisa Cameron, Ernst & Young

Position: General counsel, UK and Ireland 

Industry: Accountancy, audit, professional advisory services 

Annual legal spend: Not disclosed 

Number of employees: Around 167,000 in some 140 countries

Legal capability: Around 13 in UK and Ireland 

External law firms: No formal panel, but regularly instructs Freshfields Bruckhaus Deringer (regulatory and litigation work)Linklaters (corporate). Also uses Orrick Herrington & Sutcliffe and RPC (litigation), Farrer & Co (partnership), Olswang (employment) and Bird & Bird (contract issues)

Vanessa Sharp, general counsel, UK and Europe, KPMG


Top global law firms need not be quaking in their boots over the prospect of at least one of the Big Four accountancy practices bagging an ABS licence and launching itself into the full-service legal sector market. 

Vanessa Sharp, KPMG’s general counsel, UK and Europe, says a big policy shift would have to occur before her firm threw down a challenge to global law firms “so the magic circle and the other big players can relax – apart, perhaps, from their tax practices”, she quips. 

Indeed, mirroring the line from Big Four counterpart E&Y, Sharp suggests the narrow area of tax law is one field that could encourage accountancy firms to bid for ABS status. KPMG itself triggered a storm of speculation a few weeks ago when it was rumoured to be weighing seriously an application. But Sharp says “the jury is still out on whether we will apply”. 

Sharp joined KPMG back in 1996, after having qualified in 1991 in the insurance and professional negligence department at Ince & Co. When she became general counsel two years later she more or less made up the legal department herself. Now there is a legal team of 19 based in the UK, mostly lawyers with the odd accountant thrown into the mix. 

Again mirroring E&Y, Sharp runs an informal panel for external counsel, with Stephenson Harwood being the longest standing on the list, with other favourites including Linklaters – which does KPMG’s Competition Commission work – Freshfields, Herbert Smith Freehills, Pinsent Masons, and Eversheds, which weighs in on property matters. But for major transactions – such as KPMG’s 2006 £260m deal for offices in Canary Wharf – the legal department conducts beauty parades. 

In Europe KPMG has junior
GCs in the bigger jurisdictions such as Spain and Germany, and they instruct a mix of the global firms for cross-border issues and local independents for areas such as tax.