EY now has lawyers in over 29 countries; while Deloitte Legal is cracking China
The threat posed to City law firms by the accountancy Big Four “should not be underestimated”, according to a new report released by the Law Society.
The Future of Legal Services report, drafted through consultation with solicitors across the country, aims to predict the shape of the legal market come the year 2020.
In a stark warning to international law firms, the solicitors’ representative body has highlighted the threat the accountancy giants pose as they implement expansion of their legal services businesses on a global basis.
The report suggests that the Big Four — consisting of KPMG, EY, PwC and Deloitte — are readying themselves for changes in the rules governing the provision of legal services in countries oversees. Many nations are expected to follow the UK in liberalising their legal markets over the next few years, bringing into force non-lawyer-owned alternative business structures (ABS) of the type that have proliferated on these shores since the implementation of the Legal Services Act.
With the top accountancy outfits eyeing up “currently closed markets”, the Law Society urges law firms to ready themselves for a fight, in what it expects will be a “turbulent” few years ahead.
With the report voicing concerns of the “greater organisational” role of accountants in 2020, the Law Society is clearly concerned that law firms will be overlooked in favour of one of the accountancy giants’ legal arms in the battle for emerging markets such as Brazil and India.
If senior partners at City outfits weren’t sitting up and paying attention at this point in the report, society big-wigs go on to summarise what the Big Four have been up to over the past few years.
Ernst & Young — through its legal arm EY Law — has launched a legal services business in more than 29 different countries since 2013, increasing its number of lawyers by almost 30% to 1,100. Closer to home, EY unveiled its first law training contract late last year. Advertising initially for eight trainee positions, candidates are not required to have a 2:1 or even three Bs at A-level. Instead they must sit the firm’s academic test.
Deloitte’s march into China is also noted. Drawing readers’ attention to the accountancy outfit opening its own domestic law firm in Shanghai, it explains that Deloitte has exploited a loophole in regulations that allows international accountancy firms — but not law firms — to offer domestic legal services in the country.
Finally, the actions of PwC and KPMG are considered. Having both obtained their ABS licences, the pair have upped their recruitment of lawyers across the UK, Germany and Asia — moves that have been duly noted by the Law Society.
The message, concludes the report, is that international firms must look at the bigger picture unfolding, with many seemingly “focused on stealing market share from competitor law firms rather than managing competition from new entrants”.
Read the report in full: