LESS THAN 10 years after waging a bloody, lopsided and eventually successful battle against the establishment to set up Australia’s first audit-tied law firm, Alan Bennett was understandably dismayed by the news that his ‘baby’ was, in effect, being thrown out.
While “bitterly disappointed” by the decision to dump KPMG Legal, the firm he founded in the face of angry opposition from traditional elements of the profession in 1994, Bennett was not caught unawares by its demise.
“It’s no surprise at all. With independence issues gathering more attention, you could see the writing on the wall,” he said.
With all the controversy surrounding Bennett’s trailblazing exploits, many were surprised last week’s news wasn’t greeted with more fanfare. The man himself, however, explains the muted reception by pointing to well-documented external upheavals that gave the announcement an air of inevitability.
“Circumstances in 2003 are the absolute antithesis of those in 1994, when the whole philosophy was ripe to set up a one-stop shop,” said Bennett, who quit KPMG Legal in June to start his own firm. “Events over the past two or three years [Enron, HIH, OneTel] have put the concept of independence under the blowtorch.”
Agreeing with an element within KPMG Legal, which welcomed last week’s split, Bennett said the task of MDP law firms in today’s climate was “doubly difficult”.
“Firstly, you have to go through the process of finding work and then checking whether it’s okay to act for those clients.
“And secondly, to really flourish, you must continue to attract competent senior lawyers. Clients usually follow lawyers, but someone coming across to [an MDP] may lose up to 40 per cent of their client base.
“It’s hard to implement a business plan going forward if there is not critical mass at the top level,” he said.
Asked whether he thought other Big Four accounts, PricewaterhouseCoopers Legal, Ernst & Young and Deloitte, would follow KPMG’s lead — just as they did in the past by setting up legal arms — Bennett remained non-committal.
“It’s hard to predict, but the circumstances are the same for everyone,” he said. “Maybe [KPMG leading the way] says something about [KPMG’s] entrepreneurial flair.”