Lawyers divided on notion of big 4 threat
Several lawyers have spoken out about whether the big four accounting firms present a genuine threat to the traditional legal service offering, showcasing mixed opinions.
Lawyers Weekly spoke to five lawyers, with varying levels of expertise across the business of law, to find out whether there is a perception that the big four is something the legal profession should be concerned about.
David Field, chief legal counsel at Canon Australia, said traditional law firms “should absolutely feel threatened by all new entrants to the legal market”, noting that some would already be feeling the impacts of substantial disruption from multiple directions.
“Client businesses aren’t actually in the market for ‘law’,” Mr Field said.
“For clients, the law is just a means to an end. What businesses need are things like efficient and value-generating transactions, good compliance, brand-protection and dispute resolution.
“Law firms use the law to deliver these outcomes, but if someone other than a traditional law firm can deliver the desired commercial outcomes reliably and cost-effectively, that’s going to present a very compelling challenge in the legal market.”
A similar sentiment was offered by Katrina Bullock, general counsel at Greenpeace Australia, who said the the big four accounting firms have been a threat to traditional legal services for many years. However, at the same time, the traditional legal service firms are becoming an increasing threat to the market share of the big four, she noted.
“Over the past few years we have witnessed a convergence of legal, tax, auditing, consulting and advisory work,” Ms Bullock explained.
“The big four accounting majors are branching into legal services and leveraging their global scale, broad referral networks and diverse expertise, while the traditional legal firms are quietly capturing some of the market share of the big four.
“… The big four have yet to truly master the full legal service offering, with many shying away from the provision of litigation services. Critics are now questioning whether the provision of legal and consulting services is conflicting with the trust and impartiality required to perform robust audit services.”
For Michael Bradley, managing partner at Marque Lawyers, the question as to whether the big four are a genuine threat to the traditional legal service offering is met with a “short answer: no”.
“The big four offering is a traditional legal service offering, with a slightly different glossy package,” Mr Bradley told Lawyers Weekly.
“The functional differences between legal services as offered by a traditional large law firm, or by a traditional multidiscipline firm, are non-existent. Both operate the same business model, so the distinction is only in the perception.
“Of course, the industry has been here before. Those of us old enough to remember the 1990s will recall that the big four, with a lot of noise, went into full-service legal business back then. They either acquired existing firms or set up their own by lateral poaching. The theory, as they propounded it at the time, was that clients would flock to the one-stop shop offering, and it was widely feared in the profession that the threat was existential.
“What happened in reality was that they did okay but no better than that, and they eventually all gave it up. Corporate memory being short, it only took 20 years for them to decide that it’s as good an idea now as it was then. No doubt they have absorbed all the lessons and, this time, will get it right. Hence the fear that the legal industry is under existential threat. Again.”
While the big four continue to expand their offering into legal services, it’s important to remember that competition is healthy, according to Andrew Pike, managing partner at Herbert Smith Freehills.
“The legal market is continuing to evolve,” he said.
“As has been the case since day dot, success of all firms including the big four will depend on their ability to meet the needs of clients and the needs of the talent market.
“… The accounting firms are having some success in legal areas adjacent to some of their other consulting services. Time will tell whether they are able to branch out and be full-service competitors to the large law firms.
“We are not being complacent. Ultimately competition is a good thing. It’s not something we shy away from because we always want to improve and do the best we can for our clients and our people.”
With accounting firms “clearly” now important players in the legal services market, Gilbert + Tobin’s Alena Stirton said it presents an opportunity for traditional models to do more.
“New technologies and processes continue to present an opportunity for businesses across all industries to ‘do more’. It is essential that the provision of legal services by law firms is responsive to these changes, particularly as clients are demanding both a more commercial and cost-effective response from service providers,” she said.
“This means that, regardless of what the big four accounting firms are offering, law firms must be on the front foot in terms of integrating advances in technology (such as artificial intelligence and machine learning) into existing operations and ensuring these developments form part of the service that is delivered to clients. This also involves law firms accepting the inherent flexibility that is required for such an approach in light of the disruptive nature of new technologies. To succeed sustainably, law firms will have to continue to bring excellence and innovation to their offering.
“While there is no doubt that new technologies will continue to have an increasing role to play in the delivery of legal services, there will always be a place for the technical expertise of lawyers themselves. Specialised and complex areas of the law are clear examples of the likely mix of approach, requiring elements attributable to the more traditional service offering as well as features driven by technological change.”