They are renowned for breaking into new markets, but are the Big Four on the verge of becoming the top competitor of private practice law firms?
The Big Four are becoming a major competitor of private practice law firms. Surveys show that 69% of law firms believe consulting firms: PwC, KPMG, Deloitte and EY could potentially dominate their market share. Currently, the annual revenue from legal services in these firms exceeds £20 billion.
The Big Four consistently demonstrate that they are able to infiltrate new markets and prevail in their business areas by leveraging their current practice areas which include tax, finance and M&A. This technique means they are not building full service law firms from scratch, but they are “concentrating on areas of law that complement their existing services”. Their success is down to their brand strength, client base and ability to offer an array of services - this is what makes them so competitive, giving them the ability to dominate legal market shares.
ALM conducted a survey investigating which alternative legal service providers were considered competitors of private practice law firms. The results showed 69% of leading law firms felt that accounting companies were their biggest competitors, followed by the growth of in-house law departments at 44% and legal process outsourcing companies coming in at 28%. Clear strategies must be developed to ensure the BigLaw reclaim their market share.
The top law firms argue that the Big Four could never replace the bespoke legal services they provide. This argument does carry weight as it is unlikely that any of the Big Four firms would prevail in areas such as litigation, however law firms must recognise that their business models are being challenged as evidence shows they are losing out on corporate work to PwC, EY, KPMG and Deloitte. As a collective, these firms employ over 8,500 lawyers globally. PwC has the largest legal footprint by employing over 2,500 lawyers and can be considered to be competing directly with law firms such as Dentons and Linklaters.
EY’s legal revenue continues to rise by 10% each year and has done so since 2012. Deloitte plan to secure an alternative business structure licence, enabling them to support in-house legal departments by providing consulting services that help them utilise new technology. Matt Ellis, Managing Partner for tax and legal at Deloitte, states the plan is to “automate repetitive processes and complete routine tasks in a fraction of the time, lawyers will be able to spend more time on specialist areas”.
The Big Four are in a brilliant position to take advantage of the diversified market for legal services. By utilising their investments in innovation and technology, they are able to integrate their services and globally make themselves stand out amongst the BigLaw. The BigLaw also provide bespoke legal services and they have the unique advantage of not only being able to advise on the law, but also legal matters relating many subjects such as finance and economics.
Many methods are being employed by the BigLaw to stave off competitors; ASE Consulting and Bird & Bird have joined forces creating Baseline, a service that provides IT transformational programmes. Specialised Law firms are diversifying their expertise; Wiggin a media law firm is an example of this, by joining forces with Incopro a Technology business, allowing them to offer their clients services protecting trademarks and intellectual property.
Legal services are undergoing a massive transformation, both the Big Four and the BigLaw understand that their business models must change with client demands to ensure both can provide the best service.