A couple of years ago, I was introduced to a law student who was visiting Canada from France. In the course of our conversation, I was encouraged to ask her to name the largest law firm in her country. Her reply: “Ernst & Young.”
The legal profession in Canada continues to pose the wrong questions to the wrong people. We keep asking ourselves, “Who should be allowed to practise law?” We should instead look at the world around us and ask, “Who is actually delivering legal services?” In a growing number of jurisdictions, the answer is accounting firms.
Three of the Big Four accounting firms (PwC, KPMG and EY) have already obtained ABS licences in England & Wales. PwC Legal alone generated revenue of £41 million in 2015 from a worldwide headcount of 2,400 lawyers in 83 countries. And it’s not just the accounting giants, either. By last summer, 113 ABS licences had been issued to accounting firms in Britain.
Accounting firms are active in other jurisdictions as well. The Big Four in the Asia-Pacific region now have twice the firm partnership presence of their Big Law counterparts. In India, meanwhile, the professions are competing hard for talent and engagements in M&A, competition law, tax law and forensics work.
Here in Canada, accounting firms have been delivering legal services in tax for ages, and regulators have shown little interest in cracking down. Deloitte purchased Toronto legal document review company ATD Legal early in 2014, while PwC acquired immigration law firm Bomza Law Group two months later and converted it to PwC Immigration Law LLP. The accountants aren’t “coming,” as many headlines suggest; they’re already here.
Yet there are still many lawyers who dismiss accountants as “bean counters,” a dangerous stereotype. The Big Four are really business consulting firms: they’ve spent decades forging deep relationships with their clients, working to understand their businesses in ways few law firms do. They have brands more powerful than any law firm has achieved. They advise clients on everything. Law firms advise clients only on the law.
Lawyers often say that accountants will never compete for the truly valuable “bet the company” work. This is probably true — but it also misses the point. Accounting firms don’t want “bet the company” work. They want “run the company” work. And they’re getting it, in mid-level corporate/commercial, labour and employment, regulatory compliance, immigration and, of course, tax law. And there is far more of this type of work.
When, not if, an accounting giant starts to compete with your law firm, don’t bother picking a fight with it: these entities dwarf even the world’s largest law firms. (The smallest Big Four firm, KPMG, employs about 174,000 people.) It won’t be a fair fight, or a long one. Instead, learn from their examples in client service.
The Big Four prioritize the client relationship: they learn everything they can about the challenges, risks and opportunities facing the companies they serve, and they constantly look for ways to help their clients achieve their goals. They streamline their processes and systematize their operations with technology, in order to make their costs of production lower and more predictable. They promote their brand above their individual professionals, not the other way around. And they lavish attention on their current clients, in sharp contrast to law firms, which often seem more interested in bringing in new clients than servicing the ones they already have.
Accounting firms are not superior to law firms when it comes to legal expertise — not yet, anyway. But they are superior when it comes to client knowledge, service and value for money. Law firms that can seriously compete on those grounds will be in the best position to succeed in a legal marketplace where accounting firms aren’t tomorrow’s looming threat, but today’s ordinary reality.
(Illustration by Clare Mallison)