It’s no secret that for years now the so-called BigFour accounting firms— Deloitte, Price water house Coopers, Ernst & Young, and KPMG — have at-tempted to strategically nudge them-selves into the legal market. That BigFour foray has long been forecast to affect BigLaw. However, a new report by the president of the Association of International Law Firm Networks suggests that BigLaw appears safe for the time being, and independent firms in midsize markets could be the ones to take a hit.
The report, titled “Lawyers and Accountants — Professional Services Disruption,” argues the makeup of who offers legal services has already changed worldwide, with the big four employing approximately 10,000 attorneys in 80 countries outside the U.S. According to the report, “What is actually taking place is the redistribution of legal services everywhere else in the world — except for the U.S. and the major markets. This leaves indigenous firms to face the brunt of new competition from the Big Four.These are countries in which the BigFour have a large local presence and are local themselves in every sense. In turn, this will affect law firm networks whose members are among the largest local firms.”
This whole discussion first started years ago. In the 1990s, accounting firms attempted to grab a slice of the global legal services market. Then came the accounting scandals such as the 2001 collapse of Enron Corp., which slyly and illegally hid piles of debt and toxic assets from investors and creditors. Enron filed for bankruptcy in December 2001 — the financial world’s largest corporate bankruptcy at the time. The fallout led to regulation that barred auditors from offering legal services to their clients. But more recently the Big Four have attempted to regrow their legal net-works, particularly in emerging economies such as Latin America, Africa and the Middle East.
A 2016 Harvard Law School study authored by David Wilkins and MarieEsteban noted this reemergence of theBig Four: “Far from dying, in recent years the legal service lines linked to the international accountancy net-works have grown significantly in size, scope and importance. Nor are the legal services these networks deliver confined to tax issues. Although tax-related advisory services remain an important cornerstone, the Big Four legal networks are now important players in a broad range of legal fields including premium and fast growing practices such as compliance, finance,M&A and employment law.”
What this new AILFN report suggests is that there are multiple factors insulating big law from, at least for now, feeling any noticeable impact from the Big Four. The report states,“The principal reason why big law has nothing to fear in the medium term is because they have offices in the same markets as their competition, which cumulatively are much larger than the Big Four who have focused on the smaller jurisdictions to expand. This means that adding more lawyers to these markets has a small or no effect on the competitive environment.”
THE IMPORTANCE OF SOCIAL MEDIA?
According to the AILFN report:“Social media will continue to grow in importance. While law firms at the top level will not be engaged because of social … it does mirror how a firm or company is perceived. The size and existing brand recognition has created an inherent level of market awareness surrounding the Big Four. This is reflected by the number of unique users going to the Big Four websites (more than 10 times the competing law firms and the LPO providers).”
ALTERNATIVE PROVIDERS
Another factor to consider, accord-ing to the report, is what impact the growth of alternative legal services providers might have. “ALSPs will grow; they are projected to provide$27 billion in law-related services by2024, and their primary competition will be the Big Four. They can easily become an ally of both BigLaw and legal networks.”
— Chris Outcalt