The legal arms of Ernst & Young (E&Y) and PricewaterhouseCoopers (PwC) are drawing up plans to overhaul their practices to cope with regulatory pressure to separate legal services from audit clients, it has emerged.

Both moves are directly linked to the sweeping anti-fraud Sarbanes-Oxley Act, passed in the US in July, which is set to introduce tough restrictions on the services accountants can provide to audit clients.