The growth in the legal head count at the Big Four accounting firms has increasingly got lawyers talking. And clients.
A recent comment from WickerPark Group in a blog item noted that the main observations about what is happening comes from the M&A and tax professionals who have wide exposure to both the legal and accounting worlds.
The item noted the key competitive advantages that the Big Four have over the legal firms, including the consistency of “client experience” across both functional and geographic areas.
Accounting firms are perceived as providing processes, project management, leverage, teamwork and quality control more consistently than law firms where the experience often varies dramatically from practice to practice and office to office.
The fact is that when recommending law firms, most clients will reference a lawyer or legal team perhaps, rather than the firm.
And that’s a problem for the law firms.
As WickerPark reported from one client’s observations:
“On the accounting firm side, there is more of a leveraged arrangement, and they often need to rely on knowledge from their national practice. In accounting firms, the quality control is more pronounced to ensure more consistency across the firm. I find that the lawyers who are almost always billing by the hour are more directly involved [in the work] vs. leveraged and there is less focus on quality control or consistency. It’s more dependent on the individual lawyers.”
Consistency Wins the Day
It is consistency in a variety of key fields, such as processes, project management, teamwork and quality control that helps win the day for the accounting firms, whereas legal practices can vary widely from office to office.
Law firms have had efficient and sophisticated client account management practices for a very long time, which they are extending to their legal practices as they expand into the law.
It is those client account management processes that WickerPark consider the main area that law firms need to focus on if they are to survive the onslaught.
How Big Is the Threat?
The move by the Big Four has been well foreshadowed.
Lasty year, the report Elephants in the Room Part I: The Big Four’s Expansion in the Legal Services Market, by ALM Intelligence, made it clear that the Big Four’s vast brand power and client along with their multidisciplinary service offerings would seem them increasingly intrude upon the lawyers’ market share.
The firms have all invested heavily in their legal services, now employing over 8,500 lawyers internationally.
We recently reported on Deloittes’ move into the legal market with their recent Singapore law registration.
The largest “law firm” in the Big Four is PwC Legal, which has over 2,500 lawyers making it the world’s sixth largest legal service provider, alongside such Big Law names as Clifford Chance and Jones Day.
PwC Legal also has a vast global footprint, incorporating 85 countries, much more than any law firm. It has also shown its ability to adopt an aggressive and innovative strategy, last year completing a five year deal to take on General Electric’s 600 staff in their in-house legal department.
It’s probably doubtful if many of the Big Law firms would have the ‘cred’ to do such a deal notwithstanding their undoubted legal power.
But the Big Four’s legal groups continue their double-digit revenue growth even if they may focus on lower value work compared to the major legal firms.
What they make lack on the ‘value’ front they will doubtless more than make up for in terms of their highly systemised management systems and processes, deployed with increasing vigor into the legal arena.