Question of the Month: The Big Four by Bruce | October 28, 2019 | Articles, Business Models, Question of the Month | 8 comments You know the drill. Have at it! Comments box below for, uuhhh, comments: [poll id=”19″] Print Version| Share « Previous Article Next Article » Related Articles "Everything Must Go!" (Your Office Edition) Juneteenth Fun With Rate Increases: How High is Too High? The Associate Attrition/Comp Wars: The Data is Just Plain Weird Happy Birthday, Adam Smith! Email Delivery Get Our Latest Articles Delivered to your inbox + 8 Comments Midrange Guy on October 28, 2019 at 11:49 am By tradition, enshrined by case law, state supreme courts supervise not just lawyers’ literal admission to the bar (being allowed to represent clients in court) but the practice of law outside the courts: before administrative agencies, in negotiations, and in the office. Some bright soul at one of the Big Four will figure out that what state constitutions have given, state constitutions can take away. Under the rallying cry of “more consumer choice,” that bright soul’s employer will sponsor an amendment to one state constitution stating that the practice of law means only filing documents in court and appearing in court, and that all other activities within the practice of law, including giving legal advice, require only a license from an administrative agency and not admission to the bar by the state supreme court. In effect the Big Four will take the courts out of the business of regulating office lawyers. The act will become a model for other states. Bruce on October 28, 2019 at 1:55 pm I think you pretty much have to be right; in every other Anglo/Western legal system where this restraint of trade has been challenged, it has fallen, or the regulator itself has reformed the restraint (Australia, Canada, UK, essentially all of the European Continent and Latin America). My question to the audience is, “Why wouldn’t some forward-looking state [New York, in my dreams] take the initiative, repeal the restraint, and invite companies to register their legal services subsidiaries there?” Think: What Delaware is to corporations, CA/FL/IL/NYTX could be to law companies. Graeme Johnston on November 3, 2019 at 4:17 am Re the European Continent, there may be a few bumps in the march of history 🙂 https://inhouse-legal.eu/legal-technology/german-court-rules-legal-bot-is-against-the-law/amp/ Bruce on November 4, 2019 at 9:56 am And of course the ruling came at the behest of a local medieval guild bar association. Richard Parnham on November 14, 2019 at 1:28 am If you look at the Spanish legal market (for example), the Big Four are some of the very largest firms by revenue. Same in other jurisdictions. The future is here, as they say, it’s just not evenly distributed. Bob Jessup on October 28, 2019 at 2:53 pm Once they decide what they want, they’ll have it. And eventually it won’t be just the Big Four; the regionals and superregionals will follow in due course. That doesn’t mean “old model” lawyers will disappear; we’ll just be facing a very different competitive environment. Skeptic on October 31, 2019 at 12:56 pm How far the Big 4 can penetrate into the legal market is a very interesting question. Clearly, there are some areas they are uniquely suited to steal from large law firms. Tax and anything tax-adjacent being the most obvious example. And any process-oriented, repetitive work (i.e. junior-level work) that can be done faster, cheaper and better by technology will also garner Big 4 attention because they can research and scale any solution much faster than even the nimblest law firms (although they aren’t alone in competing for this type of work; this field is already getting pretty crowded). But as you move up the value chain in terms of the work lawyers do, I’m not so sure Big 4 professionals are well suited to be substitutes, at least not without some drastic changes to their current ranks. Litigation of even reasonable stakes specialized enough to require skilled negotiation and advocacy and seasoned judgment (not to mention possibly, gulp, trial skills)? Guiding a transaction of roughly the equivalent nature requiring the same level of ability? Important interactions with a governmental regulator not named IRS or Treasury? Which leads to the natural question, if they don’t have the talent currently to serve those types of needs, could they get it without altering their business models? As I understand it, Big 4 firms are structured much, much differently than a law firm. Small, rigorously patrolled partnerships with extremely high leverage underneath with the concomitant financial rewards to the lucky few to make the partnership (which is for limited duration). Essentially, the IBank model. Can lawyers with options be enticed into that structure en masse? If you had the choice between, say, going to a boutique or going to a Big 4, which will most lawyers choose? An interesting thought experiment to say the least. John Sterling on November 27, 2019 at 12:37 pm I actually think it falls between narrow and existential. Big 4 growth in legal will certainly reach beyond automating and leveraging in commodity services. But, once they get into the high end services, they will need very similar talent and knowledge bases as BigLaw. The economics of professional services at that level of sophistication and scale are not all that complicated. In other words, the Big 4 will get as deeply into BigLawLand as they are able to attract and pay the talent that is required to attract and serve those clients. Since most law firm collapses are a function of an exodus of productive, client generating partners, it will be an existential threat to firms who lose too much talent to the Big 4, too quickly.