The Big 4 Are Putting Down Roots in the Legal Sector

회계법인들이 법률시장에서 점차 비지니스를 늘려간다는 소식이네요. 사베인옥슬리법이 가장 큰 걸림돌이겠죠.

로펌들로선 반가운 소식은 아닐텐데 이를 어떤 시각으로 볼지 궁금하네요. 앞에선 돕는척 했지만 뒷통수 치고 있었던 건가.

https://bol.bna.com/the-big-4-are-putting-down-roots-in-the-legal-sector/

The Big 4 have matured too

Where does this leave the Big 4? They are resourceful and generally run by businessmen and businesswomen who have already established a track record of growth and success, and are trusted by their clients. The Big 4 have already re-invented themselves to capitalize on labor rate arbitrage with centers in Asia.

Over the past decade they have grown far beyond the service offerings they had at the end of the last century, they understand how to balance investment and growth with brand permission, recent moves into high-end strategy, specialist technologies and aspects of consulting engineering appear to have been successful. The Big 4 command a place advising the ‘C suite’ on interrelated complex business issues and insights, and now it appears those ‘C suite’ clients have granted them permission to offer legal services too.

Can the Big 4 succeed in law this time?

Critically from a globalizing perspective, the Big 4 have now established international profit sharing, and cost and pricing structures that underpin their globalizing business models, which allows for coordinated international investment on a scale that leaves law firms well in their wake. Importantly, many international law firms are still wrestling with an effective international business model. And until they get this right they will be at a competitive disadvantage to the Big 4 – particularly the IBLs and large generalist national law firms, who are most vulnerable to the rise of Big 4 law.

But will the law of diminishing returns kick in sometime – how big can the Big 4 become before that very benefit becomes a negative? How will the expanding issues of conflict be resolved and will another crisis of confidence of the professions bring it all tumbling down just as it did in 2002 culminating with the Sarbanes-Oxley Act. The Big 4 now have political muscle, they have matured over the past dozen years or so and have been deft at managing political and bureaucratic criticism and pressure, be it within the E.U. or the U.S.A. It seems unlikely they would be taking this path if they foresaw an insurmountable regulatory barrier.

Will it end in tears again?

So how will this end? Some 15 years ago the Big 5, as they were then, thought they could buy their way into law by hiring laterals on guaranteed drawings and that the clients would come. Was it really successful? Well it depends on the metrics you choose to use, but most of the Big 5 had not recovered their investment by the time the shutters came down. And in many jurisdictions the blue ribbon clients had remained loyal to strong local branded law firms. This time the Big 4 have an opportunity to be part of the generally accepted disruption that is transforming legal services – they smell blood and changed client sentiment. So will they capitalize on this opportunity and create true differentiation and client related smarts and be part of the NewLaw wave, or will they merely be another BigLaw alternative providing multi-disciplinary services to their large clients?

This time they are here to stay, but don’t hold your breath waiting for anything really new.