Price Waterhouse, the Big Six accountancy firm, is to take on City lawyers by setting up a legal practice later this year.
The firm, which because of Law Society rules barring multi-disciplinary partnerships will operate as a separate practice in association with PW, will be headed by Chris Arheim, a corporate partner in the London office of Leeds-based Hammond Suddards, who approached the firm some time ago. No decision has yet been taken on a name, but the firm, due to open for business in April, hopes to have 50 lawyers within four years.
The move, which is likely to be followed by other leading accountants, could be a blow to many medium-sized firms, which are already struggling while the larger firms become bigger and regional practices, such as Hammond Suddards, move into London.
When Arthur Andersen, the US-based accountancy and consulting firm, set up Garrett & Co as a law practice within its world-wide organisation in 1993 there was widespread scepticism about its prospects. But the firm now has 30 partners and 70 fee-earners, while the addition of the Scottish firm Dorman Jefferies to the network at the beginning of this year brought an additional 14.
Alastair Gorrie, head of the European Union unit in PW's legal network, explained that the development was designed to fill a gap in the organisation's international coverage.
"It will be particularly effective with multi-territory work, where legal input is required in different jurisdictions," he said.
However, the firm stressed that not all of its work would come through referrals from PW. Mr Arheim and those who joined him would have to develop their own practice, it added.
In common with other leading accountancy firms, PW has employed numbers of lawyers for some time. They currently spend most of their time on tax, while the new firm will be looking at various aspects of company and commercial work.
Coopers & Lybrand, KPMG and Ernst & Young - which, like PW, have strong legal presences in Continental Europe - have all been rumoured to be looking at following Andersen down this road, but have yet to make a move.
However, Noel Hutton, head of the corporate department at Hammond Suddards, predicted that this development would lead to them looking at the issue more closely. Law firms, he added, would just see it as another competitor.