Businesses May Have Alternatives to Status Quo In Legal Services — Recent Moves by The Big 4 in the U.S. (Part 1 of 4)

For business owners and executives in the U.S. who contend with increasing legal and regulatory demands — there’s good news. Through the Big 4 accounting firms you might find more efficient — and for some jobs more highly skilled — choices for the conduct of your company’s legal affairs.

Most law firms seem complacent — and many of their business clients seem to feel stuck with what they get from those law firms. Consider:

The 2018 Altman Weil (consultancy to law firms and corporate legal departments) survey of law firm leaders reported:

In 69% of law firms, partners resist most change efforts“.

Why do those partners “resist most change efforts”?

59% in those law firms answered: “We are not feeling enough economic pain to motivate more significant change.”

How do these law firms’ clients feel about what those law firms are giving them?

A majority feel powerless to ask for anything better.

Altman Weil’s 2017 Chief Legal Officer Survey (2018 edition is scheduled for this November) asked why they were not more demanding of their outside counsel on behalf of their companies:

The top reason, given by 55% of CLOs [chief legal officers], is that they believe that they do not have enough buying power to negotiate more effectively. The next most frequent response, from 51% of [corporate legal] departments, is that law firms resist giving greater discounts. An additional 30% of departments say they don’t push harder for discounts because they don’t want to damage good relationships with their outside counsel.”

As an attorney who (ten years into my career) left the practice of law to run a division for a corporate client, these survey results ring true to what I’ve consistently heard from acquaintances in law firms and among business owners and executives.

With this post I begin a four-part analysis of one set of alternatives to this dreary stalemate: The Big 4 accounting firms (PwC — the former Price Waterhouse Coopers, Deloitte, EY — the former Ernst & Young, and KPMG).

Outside the U.S. the Big Four’s presence in the legal industry’s landscape is old news. Each has “an average of 2,200 lawyers working for them in 72 countries (see here and here)”. Until just last year the conventional wisdom held that technicalities of U.S. bar regulation prevented PwC, Deloitte, EY or KPMG from entering the U.S. market.

Traditional law firms — in the U.S. at least — could breathe easy.

Then one year ago PwC opened a law firm in Washington, D.C.

And in June Deloitte UK and the San Francisco-headquartered immigration law firm of Berry, Appleman & Leiden LLP announced an agreement that gives U.S. businesses market access to Deloitte Global‘s immigration legal services worldwide — including in the U.S.

Last month EY announced its acquisition of Riverview Law — a UK-based “alternative legal service provider” — what some call a “law company“.

This move was notable not for geography — Riverview Law is UK based — but for the Big Four’s entry into what it calls “legal managed services“:

Technology-enabled, process-driven work necessary to litigation, compliance, contract review, and other “legal” tasks — whose accuracy and efficiency don’t depend on the manual intervention of a bar-qualified, law grad lawyer.

EY is the first of the Big 4 to enter this field — and it’s been view as a precursor for the other three.

In Parts 2, 3, and 4 we’ll address exactly how the Big Four accounting firms may offer positive options for U.S. business owners’ and executives’ legal needs — in a setting where traditional law firms and traditional in-house counsel departments seem stuck in operational mediocrity.

 

Part 2

Part 3

Part 4