Are the accountants on the money?
Past performance is not always a good indication of future performance; dispel that accountants’ previous withdrawal from law firm space. This time they mean war. Law firms must not ignore the threat the Big Four accountancy firms pose.
PwC boasts £41 million revenue from legal services last year, and EY plans to increase its manpower by 100% this year and continue aggressive growth in the following years. They have a clearly defined strategy and rather than tackle Magic Circle firms head-on, to begin with their resources are focused on mid-market corporate, commercial, employment, immigration and pensions.
Consequently, it is the mid-tier firms who are presently facing increased competition. After the struggle post-2008 and the around of mergers that followed, these firms haven’t had an easy ride; losses are more devastating for mid-tier firms as profit margins are far narrower.
Law firms can ignore the threat. The accountants are tooling up and have their gloves off! They have hired senior level talent from law firms who know the Achilles heel of law firms and how they operate; once the Big Four have firmly anchored themselves into the mid-tier work, with larger practices and unrivalled capital, it is inevitable that they’ll target big ticket deals.
Of course, the accountancy firms face restrictions that law firms don’t. In the increasingly multi-jurisdictional corporate world, inability to practice law in huge economies such as America and India poses a substantial problem. Notwithstanding this, PwC is currently leading the charge with lawyers stationed in 80 countries; hardly signs that they will not be able to compete internationally.
Global revenues of the Big Four are eye watering delivered through corporate and technological sophistication as well as high level corporate relationships. The brand recognition is especially attractive to the younger talent pool, the accountants offering superb career opportunities. The accountants are all about grabbing market share and law firms need to resist; isn’t it about time law firms took their gloves off and made it a (prize) fight?!