There’s nothing like a report on the Big Bad Four to get the legal sector’s hackles up and the latest report by LexisNexis is likely to be no different, looking, as it does, into the accountancy giants march into legal services.
The report by LexisNexis asks whether the Big Four are likely to supplant traditional law firms. It also asks whether they want to, and what traditional law firms can do about it.
Reports of this nature often feel inconclusive, although Lexis provides some interesting stats and quotes from the market.
Ever since the now Big Four accountancy firms first began their push into legal services in the 1990s, the report points out that legal commentators have tried to frame their entry into the market as a battle over turf.
The Big Four’s latest expansion into legal services is ‘different’, the report says. It comes at a time of considerable upheaval in the legal industry, with the use of alternative legal services providers (ALSPs) growing significantly over the past five years as they combine technology and process efficiencies to handle high-volume, low-value legal work at a much lower cost.
“The last time they tried to enter the legal profession in the 1990s, their strategy was we’re just like law firms only bigger. But that’s not their strategy anymore. Their strategy is we provide a different kind of offering, moving from a fee-for-service model to an integrated solutions model,” says David Wilkins, Lester Kissel Professor of Law at Harvard Law School.
Instead of one off bet the company matter, Wilkins says the Big Four want the ‘run the company’ matters: the post merger work; and the integration of contracts and policies and procedures.
“The Big Four can offer a far higher integration of technology, project management and process management; they employ a huge number of people across a huge range of specialties and they are way more global than even the most global law firm. This is why, for many kinds of issues that companies face, it’s a very attractive offering,” says Wilkins.
But while the Lexis report is pitched in a way that may provide comfort to law firms, it shouldn’t.
Emily Foges, Lead Partner for Legal Managed Services at Deloitte says: “The vision for Deloitte Legal has always been that you bring together high-quality legal advice with legal management consulting, legal managed services and legal technology. This way you can provide a complete end-to-end service to the client and achieve the outcomes they are looking for, not just give them advice on those outcomes.”
For law firms this surely should sound alarm bells? Speak to clients and they are crying out for advisers who can take away their myriad of legal needs for a reasonable price, in a joined up way, and apply analytics to their data.
The stats appear to back this up – take a look at the table below, which charts the rise in legal services revenue of KPMG and PWC.
The report points out examples of where law firms are responding and David Carter, Chief Product Officer at Norton Rose Fulbright, says that the trends that have created opportunities for ALSPs to thrive – new technology, growth of in-house legal teams and deregulation – are just as relevant for traditional law firms.
“Our response to the Big Four and ALSPs has been driven more by our simultaneous reaction to the trends enabling their development than by a defensive response,” says Carter. “Indeed, we have expanded our capabilities in recent years into areas pioneered by the Big Four or ALSPs, such as legal operations consulting and risk consulting, so the movement is both ways.”
We couldn’t agree more.
Read the report here: https://www.lexisnexis.co.uk/research-and-reports/big-4-report.html