"It is definitely going to be one of the three largest law practices in Russia and the CIS," said Ernst & Young partner Constantine Lusignan-Rizhinashvili, who is set to head the combined CIS practice at DLA Piper.
The combined practice will boast around 100 lawyers, the majority coming from Ernst & Young's four offices in Moscow, St. Petersburg, Kiev and Tbilisi.
The deal takes effect July 1, when DLA's six Moscow-based lawyers will move into Ernst & Young's offices on Sadovnicheskaya Embankment, Lusignan-Rizhinashvili said. The deal requires the approval of DLA partners outside Russia.
EY Law's split from its parent company comes at a time when its partners are increasingly confident that they can fend for themselves in the feverish wheel-and-deal environment in Russia.
The firm is active in mergers and acquisitions as well as in real estate, intellectual property and tax law. Its clients include SeverstalTrans, Gazprombank, BP, the household appliance maker Merloni, the insulation producer Rockwool and the brokerage Troika Dialog.
The value of mergers and acquisitions activity in Russia rose by 70 percent to $30 billion last year, according to Ernst & Young. Brokerage Aton Capital estimates that Russian companies have sold shares worth $2.9 billion in initial public offerings so far this year, more than twice the amount they sold over the whole of the past decade.
Moscow lawyers say they routinely put in so many hours drafting contracts and proposals that they do not even find time to enjoy the free massages their firms provide.
Ernst & Young was under pressure to spin off its legal services after the collapse of Arthur Andersen in 2002. Critics say an auditing firm cannot be objective when it seeks legal and consultancy work from the company whose books it is inspecting.
But some large accounting firms relish being a one-stop shop for the legal and consulting needs of their clients.
"We have no intention of spinning off our legal practice," said Mike Kubena, managing partner of PricewaterhouseCoopers, which employs over 50 lawyers in Moscow. "Our legal capabilities represent an important component in many of our advisory projects."
Ernst & Young -- which employs a total of 1,900 people in Moscow including in its law department -- will retain some lawyers in the CIS to provide services, such as helping clients make sense of currency and customs regulations.
"We hope to finalize out internal approval process within the next few weeks," DLA Piper's managing director for continental Europe, Steven de Keyser, said by telephone from Brussels.
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