PRICEWATERHOUSECOOPERS HAS announced its decision to integrate PwC Legal into the broader PwC partnership under a multidisciplinary practice structure (MDP).
The firm appears to have finally found a way around the complex MDP landscape, which for years saw all big four accounting firms abandon the MDP model for law and accounting. The introduction of Sarbanes-Oxley in the US had a huge effect in Australia, and accounting firms struggled to balance their legal arms with international audit requirements.
Leigh Minehan, PwC deputy CEO, told Lawyers Weekly that 60 per cent of PwC Australia’s revenue comes from non-audit clients. He admitted that there are independence restrictions around providing certain legal services to audit clients. But for the rest, he said, it is a non-issue.
Despite the challenge posed by the structures of MDPs in the past, PwC now plays down the significance of its latest move. Representatives of the firm insist the move comes as no shock for insiders, and is simply part of the natural evolution of the firm.
“I don’t think there’s any shock at all that’s come to the group. It’s something that we want to live both in substance and in form to the one firm — to have this one firm culture,” said Andrew Wheeler, leader legal services.
The MDP will continue to provide advice in its traditional strengths in corporate and commercial, employment and industrial relations, tax controversy, environment and property and litigation. Minehan revealed plans to expand into additional areas of practice, including the provision of a corporate tax consulting service.
The integration of the legal practice will create new jobs for lawyers seeking a slice of the legal, accounting and financial advisory partnership. “We will look to hire more lawyers, particularly in the corporate and commercial area which is a tight area around town obviously at the moment. And also in the tax controversy area,” predicted Wheeler.
Pay for transferring partners will be on par with the existing partners of PwC proper. “For those partners in PwC Legal who have now come into PwC as full partners, the partner remuneration structures between the two firms will be consistent. We did that a couple of years ago. So they would be remunerated no differently to the rest of the partners in PwC,” said Minehan.
There will be no job losses as a result of the restructure, according to Minehan. “Certainly there is no one being let go. We’re bringing everybody across to try and grow the practice.”
The impact on the day-to-day operations of the legal services department will be negligible, according to Wheeler.
“There’ll be some noticeable changes but others won’t be as significant. Over the last few years we’ve worked pretty closely with PwC to align a lot of the policies and systems we have in both PwC Legal and PwC; so human capital policies, co-location, remuneration, training and the like. So they’ve actually been aligned. But our people will notice differences post-1 February, which will include moving onto the same financial and billing systems,” said Wheeler.
Minehan said the decision to integrate was a practical move that will benefit clients and improve career opportunities for those with legal expertise across the entire firm. “It was always a separate stand-alone partnership with separate partners in the legal, the accounting and financial advisory partnership. And whilst we worked closely together, with clients they had to engage separately because of the way in which the legal regulations apply over the years.”
He said the change will add value to people internally as well as clients, enabling the firm to provide integrated services, not just legal services. “So the rule changed a couple of years ago and after them doing some research into how we could best take advantage of it we came to the view that it was best to integrate the legal firm fully within PwC Australia.”