Late this past week my partner Janet and I had the opportunity to participate in a panel at the 23rd annual Thomson Reuters Marketing Partner Forum (held this year in Orlando) on the “rise of the Big 4″—and, we took it to mean, all other species of non-law firm legal service providers.
Here’s how the official agenda (which, full disclosure, we had no hand in drafting) described it:
Invasive Maneuvers: Emerging Markets, Client Demand & the Rise of the Big 4 in Legal Services (Breakout)
If the recent formation of the ABA Commission on the Future of Legal Services is any indication, the United States legal system is very much aware of the long term ramifications of the UK Legal Services Act of 2007 on non-US legal engagements. For corporate clients interested in streamlining their legal fees and working with fewer partners, the Big 4’s newly-accredited legal services have acted as de facto siren’s calls away from the dreaded billable hour. This conversation examines the long-term impact of the Big 4 on process-oriented work in the legal market and considers how these firms are bolstering their proximity to a larger slice of the proverbial pie.
Bruce MacEwen, President, Adam Smith, Esq.
Anne L. Ristic, Assistant Managing Partner, Stikeman Elliott LLP
Janet Stanton, Partner, Adam Smith, Esq.
Melanie Zaletsky, Global Head of Strategic Innovation, Hogan Lovells US LLP
As I said, we interpreted the topic and description as an invitation to have a discussion beyond the scope of the Big 4 per se. But first, some data points we offered up to open the session. (Those of you who may have seen an Adam Smith, Esq. presentation will recognize our fondness for data.)
- Last year about 5—10% of US law school graduates went to work for an accounting firm;
- PwC, EY, and KPMG have all secured ABS licenses in the UK; only Deloitte has, to date, demurred;
- PwC has announced publicly its intent to grow its legal services revenue to $1-billion by 2019 (closer than you think), which would make it an AmLaw 20-size provider;
- And all three of the firms currently active have made some high-profile hires, including practice heads in areas including finance, corporate, project finance, and private equity, from firms such as Addleshaw Goddard, Baker & McKenzie, Berwin Leighton Paisner, DLA, Freshfields, McDermott Will & Emery, Olswang, and Weil Gotshal.
A logical-enough starting point seemed to be to ask the law firm panelists, Anne and Melanie, whether their firms were seeing encroachment from the Big 4 in any of their markets, Hogan Lovells being of course thoroughly international and Stikeman relatively Canada-centric. Their answers were consistent: So far, yes, around the margins of their practices and in areas where, as they put it diplomatically, their lawyers did not feel a compulsion to compete. But Melanie hastened to add they watched what the Big 4 were up to very attentively and Anne agreed, saying that the Stikeman followed their market activities very closely. Indeed, the Canadian Bar Association, and the governing body in Ontario (Stikeman is based in Toronto) were actively exploring the functional equivalent of permitting ABS arrangements in Canada.
Janet and I noted that the combined revenue of the Big 4 is substantially greater than that of the AmLaw 200—about $150-billion for the Big 4 combined vs. just barely north of $100-bilion for the AmLaw firms.