More than bean counters…
If I asked you what the Big Four firms – Deloitte, EY, KPMG, and PwC – do then my guess is a lot of you would say something like accounting, consulting or business advice.
You’d be right but there’s another part of their business which a lot of people aren’t aware of and they are looking to expand it.
Research from Said Business School shows that they are expanding their legal businesses and capturing an increasingly large share of the global market for legal services. According to the research, the four firms generated $1.5bn in revenues from their legal segments in 2021, up from $900m in 2015 and $1.2bn in 2017.
The rise of the Big Four accounting firms in the legal services sector is rapidly changing the competitive landscape of the legal industry.
The Big Four have dramatically expanded their legal businesses over the past decade, following a renewed push in the 2010s, and have achieved growth by expanding into multiple practice areas. They are increasingly beginning to compete with traditional law firms, as they broaden their range of services and established reputations and relationships with multinational clients.
However, despite the significant growth of the Big Four in the legal sector, their gains are beginning to plateau. For reference, the Big Four’s legal revenues grew marginally from $1.48bn in 2019 to $1.5bn in 2021, despite a boom in wider legal sector revenues. To capture more work and continue their expansion, the Big Four are pursuing a new push to bolster the ranks of their legal businesses.
EY, for example, aims to triple its lawyer headcount in the UK and Ireland over the next three years, while PwC and KPMG are looking to double the size of their own legal departments over the next three to four years. EY’s push to expand its legal business comes as its potential worldwide split could free the firm from conflict-of-interest rules that currently block it from selling services to audit clients.
The shift has seen the Big Four encroach on law firms’ businesses, with more than a tenth (13%) of British law firms reporting that they had lost work to one of the world’s top accounting firms in 2022. Top American law firms have also experienced significant competition, with almost a quarter (24%) of large US players stating they had lost out on business to the Big Four over the past year.
The push to deregulate the US legal sector could see the Big Four capture an even larger share of the American market. The report says that the push for deregulation could provide a significant opportunity for the Big Four to continue to expand their presence in the legal sector.
The rise of the Big Four in the legal services sector though has raised concerns in some quarters about the impact of their expansion on traditional law firms. Some argue that the Big Four’s expansion could result in a loss of expertise and specialization in the legal sector, while others express concerns about conflicts of interest.
Whatever the outcome though, one thing’s for sure and that is that there will be more lawyers in the Big Four joining their accounting, consulting and business advisor colleagues in the next few years.