David Holme, the founder, and CEO of Exigent Group, a company that provides legal and contract management services, recently wrote an article on the emerging trends, changing norms and practices of the legal industry. Called Time to spring forward, Holme’s talks about the disruptions, threats, and obstacles facing the profession today, but also the many opportunities. He believes the main disruptors to the legal market are not tech companies, but the Big Four accounting firms — Deloitte, PwC, EY KPMG.
“[The Big Four] are not only embracing technology to be able to provide cost-effective legal services, but they are also driving a change in the pricing model,” writes Holme. “They provide packages that bunch together a number of services for a cut cost. Without dwelling on the P&L, they are changing their pricing structures in order to better service the client — they are willing to take a hit in one department to attain high-end work in another.” The rationale is that tech start-ups lack the financial backing, law firms are slow to adapt, and that the hurdles one needs to disrupt an industry are clearly not only legal but financial as well. So, here come the Big Four to the rescue.
According to a NatWest (UK bank) November 2016 report entitled A perspective on the legal market, the Big Four, once shaken to the core by the accounting scandals of the early 2000s, “have organised themselves on a matrix basis that crosses borders and product lines, with legal services sitting among the tax, audit and industry groupings that their multinational clients are already using. This strategy has seen income rocket globally, with PwC Legal alone earning £59.9m (£56m being UK fee income) in the last financial year, an increase of 25% on the previous year.”
It is true that large players like the Big Four have the resources, financial power and motivation to be agents of change. They also have the size and worldwide presence to make an impact, and most importantly, they have the money to invest and acquire. But, says, Andrew Arruda, CEO and co-founder of ROSS Intelligence, it’s not that simple.
“While the Big Four are massive — Deloitte, for example, can spend more on training than the fee income of the world’s largest firms — thinking innovation and change will only come from them may be missing the mark. While the Big Four will certainly bring about a ton of change, they do not have the expertise needed for the wide range of complexities which law firms deal with and solve on a daily basis. Thinking the Big Four will dominate the legal space is something you hear about, and besides the regulatory issues, which are many, I think we will see the rise of different types of law firms — some new, some reborn — which will bring about the core changes within the legal industry — an industry you really should never underestimate!”
As stated in this Economia opinion piece on the power of the Big Four and law, “…accountants are increasingly likely to be competing with their own clients rather than lawyers,” since much of their work can now be completed for free online or inexpensively by the clients themselves — just like legal services.