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In March 2015, the Economist ran an article titled: Attack of the bean-counters, Lawyers Beware: the accounts are coming after your business.
This article succinctly describes the first tentative steps the “Big Four” (EY, KPMG, Deloitte & PwC) were making into the legal market. Since then, plenty of ink has been spilled over this Sword of Damocles hovering over the profession.
But perhaps we are missing a more material peril, waiting in the wings: the rise and rise of NewLaw.
The Big Four for a long time have been positioning themselves as more than bean-counters; they are increasingly recognised as multidisciplinary business advisers who can both solve complex problems and minimise risk. Their ability to scale, deploy technology
and attractively bundle services does make them a major threat to the law firms status quo– particularly the mid strata. Indeed, only recently PwC Legal topped the Acritas’ Global Alternative Legal Brand Index 2018.
The US remains an obstinate barrier as almost every jurisdiction has ethics rules that bar nonlawyer ownership of law firms, nonlawyer management of law firms, and sharing fees with nonlawyers, according to an issues paper released
by the ABA Commission on the Future of Legal Services in 2016.
To ensure auditor independence is maintained, the Sarbanes-Oxley Act restricts auditing firms - the core business of the Big Four - from providing non-auditing services (including legal services unrelated to auditing services) to their audit clients.
This is further compounded by the conflict of interest issues which bind legal practitioners. As the Big Four seeks to expand into providing legal services, their other services (including auditing, consulting, financial advisory and tax compliance offerings) correspondingly will provide greater conflict of interest challenges.
However, other jurisdictions, such as the UK and Australia, are open to a legal foray. Recent acquisitive behaviour suggests strong intent to continue to develop their legal offerings. In December 2017, PwC launched ILC Legal (read this NYT article) and only last week entered into an alliance with Fragomen,
while Deloitte expanded their offerings in the UK by recently acquiring Riverview law (read more here).
Not only this, we are already aware of their legal muscles: PWC have over 3,500 lawyers in 90 counties and KMPG’s Legal Services network brings together 1,500 lawyers across 50 KPMG member firms. T
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