Impact of the Big Four on the Legal Market

Legal market watchers could be forgiven for thinking the attention that this deal has received is much ado about nothing. Riverview Law, after all, is significantly smaller than many of the most well-known ALSPs. While financial details on the company were not disclosed, Riverview Law is rumored to have earned somewhere between five and ten million pounds in annual revenue last year. While that number is just a rumor, we know, from the firm's Company House filings, that they have around 100 employees. That bit of knowledge, combined with knowledge gleaned from previous public filings, gives the revenue rumors some credibility. Compared with Axiom, which is expected to earn $360 million this year, and Elevate, which earned approximately $40 million last year, Riverview looks small. Scoffing at the deal in this manner, however, misses the point. Some deals are important because of their size. Others are important because they are accelerators — they increase the pace of change in an industry or in a segment of an industry. EY's acquisition of Riverview could be seen in this light. Below is a quick analysis of how the acquisition may impact different sections of the legal market.

ALSPs: An Evolving Market

EY's acquisition of Riverview Law has the potential of shaking up the ALSP market in two important ways. First, it may help facilitate increased acquisitions within the space. Many of the most prominent ALSPs are a decade or more old. Some of their founders, like Elevate's Liam Brown, have publicly stated that they want to remain independent. For the others, their founders and early investors are likely looking for exit strategies. It has been rumored that several prominent ALSPs have been “for sale” for some time, with the word on the street indicating that differences with valuations are holding up sales. If this is true, the Riverview acquisition may help establish a baseline benchmark multiplier in the ALSP market. Once the firm's sale price is known — and it will be known — it will help reinforce the revenue and profit multiples which are used to inform valuations. This should help make the market more efficient and, potentially, usher in more sales.