This is the sixth part of a series exploring the key players in the legal industry ecosystem and the pressure they are exerting and enduring. The author, Lucy Endel Bassli, was assistant general counsel at Microsoft and recently founded InnoLegal Services and serves as Chief Legal Strategist for LawGeex.
There has been a significant amount of well thought out articles in the legal press on the topic of the entry of “Big 4” accounting firms into legal services. Most recently, the announcement of EY’s acquisition of UK legal service firm Riverview. It is almost impossible to keep up with this whirlwind of change.
I’d like to take a different approach for this article and provide some perspective from personal experience. Setting aside the historical developments, changes in regulatory restrictions outside of the US, and the disaggregation of legal services, I’d like to focus on what it is that makes the Big 4 appealing to commercial legal departments.
Having been in-house at a leading international company, I was a purchaser of legal services for 10-plus years. While the Big 4 were a more recent entrant, it became clear to me that the characteristics of the services they delivered to other parts of the organization would be very applicable to the legal department as well and very useful. There are several attributes of the Big 4 that make their services stand apart from law firms and stand above the alternative service providers.
These firms are many things to many people, including, but not limited to:
1. Experienced Consultants — The Big 4 have extensive business and management consulting practices with arguably the best professionals in the field. They provide a perspective into legal services which will inherently be grounded in business and tend to offer solutions to problems that contemplate the end business goals. They are experts in all kinds of operations and will naturally focus on efficiency and practical application of theory. Even if I would not have known to ask for this perspective, the Big 4 will always provide it. That kind of experience is priceless for the legal experts buying these services, who may not know that they even need such operational insights.
2. Process Engineers — With an expertise in management consulting, these professionals will undoubtedly and inevitably identify process improvements. After all, managing is all about aligning resources and delivering outcomes, isn’t it? In legal, we desperately need to rethink our allocation of resources. Much of what the industry is going through today is about changing engagements with law firms, adding new professionals into our mix, and outsourcing certain legal work. As challenging as that is for legal professionals to consider and implement, it is very easy for management consultants. Similarly, the focus on outcomes is never lost on management consultants, yet is it often lost on lawyers. Too many lawyers think that the outcome is the production of the legal advice, in whatever format. Helping lawyers focus on outcomes is another priceless benefit the Big 4 bring to every engagement.
3. Project Managers — There is no more beautiful deliverable than a piece of work product delivered by a professional project manager. Beyond just the actual deliverable, all work and engagements run smoother with a project manager involved. People are kept on track, timelines are strict, and action items are carefully tracked. The Big 4 are very comfortable with engaging project managers and make it a common practice on many of their consulting engagements.
4. Established Trusted Relationships — The Big 4 know how to deal with big enterprises. They understand the complexities and (well, let’s call it what it is) the politics of working with a matrixed organization with unclear decision-making authority and undefined processes. Beyond just understanding corporate culture, the Big 4 already have deep relationships with most large US and global companies. They likely have very useful contacts within the organization that may prove quite helpful when trying to accomplish a controversial goal or execute on an unpopular plan. Often these “outsiders” have contacts within the client organization at higher levels than those they are engaging with in the client company on any one particular project. Sometimes those connections help get projects over the finish line.
5. Proven Results — The demonstrated success in tax law services has set a foundation for expansion into legal services that is grounded in experience on very complicated legal principles. Surely, if the Big 4 can become experts in tax law, they can deliver just about any other legal service!
6. Scale — The Big 4 have presence in almost every country where there is business conducted by multi-nationals. They can reach a scale that few other providers can compare with. They seem to have connections to experts on every topic of interest to their corporate clients, whether internally within their own employee base, or within an intricate and powerful network of related entities and affiliates.
7. Quality and Reputation — There is an undeniable trust that comes with the Big 4, which is why so many large corporations choose to use them for broad ranges of services. That umbrella of trust seems to cover all the work they do, even in areas that are new to these providers. There is history of high quality, and there are widely accepted expectations of continued quality work from the Big 4. There is little doubt or uncertainty in their ability to deliver on their promises.
8. Technology — The Big 4 know how to invest in technology. They have sizeable R&D departments and are comfortable setting aside resources for the benefit of their future. They have been around a long time and continue to evolve by keeping up with technology advances. They are certainly interested in legal tech, and with their ability to scale and investment resources, will have an easy time catching up to anything that is leading the market, and likely become the industry leader themselves. Those are baskets that many clients would be comfortable placing their eggs in!
9. Predicable Pricing — These are not low-cost service providers, but neither are law firms. One thing the Big 4 has, however, is predictability on pricing. Long gone are their days of pricing by the hour (at least in the Big 4’s world), and instead fixed fees based on the project scope are the norm. More importantly, the Big 4 are accustomed to helping clients define the scope of work during the process and will adjust their pricing accordingly.
10. Sheer Size and Locations — The Big 4 have what seems to be an unlimited number of people located in the most remote corners of the world. It feels like there is no place in the world where they don’t have a presence and no end to the availability of people to put on the task. There is nothing more frustrating than hearing from a service provider that they don’t have the people available when you need them. The Big 4 always have people available.
These are some of the attributes that make me confident about the Big 4 expanding into legal services. There is no question about their potential in this space, and it only makes sense that the law firms and “not-so-alternative anymore” providers would be watching closely and learning.
Indeed, as I reflect on this list, I have to ask, why would a corporate legal department hire anyone else for certain work that is not worthy of law firm rates and is more complex than what the “not-so-alternative” provides deliver today?