And they can do plenty. To call the Big Four accounting firms is a misnomer. They are large, sophisticated, professional services firms with multiple business lines. They have long had their toes in legal waters in areas such as tax and insolvency but are firmly fixed on expanding their global legal services offering.
If you’re not convinced, look at some of the recent announcements. Deloitte launched Legal Management Consulting, aimed specifically at the office of general counsel to help “improve their operating models” and “deliver faster, more effective, integrated services within the enterprise,” according to the press release. It also became the last Big Four firm to apply for an alternative business system licence to practise law in the U.K. KPMG, E&Y and PwC embarked down that path a few years ago.
PwC announced in the fall that it would open a Washington law firm to advise clients on international legal issues outside of the U.S.
So why law and what’s the attraction? Money. The global accounting business, which the Big Four dominate, generates about US$500 billion annually, and annual growth between 2012 and 2017 was only 3.4 per cent, according to research firm IBISWorld.
Contrast that to law. In a seminal paper studying the Big Four’s growth in law, Harvard Law School professors David B. Wilkins and Maria J. Esteban Ferrer note that “the Big Four have always been attracted by the size and profitability of the legal market relative to the decline in their core audit business.” They write in “The Implementation of Law into Global Business Solutions: The Rise, Transformation, and Potential Future of the Big Four Accountancy Networks in the Global Legal Services Market” that the growth in legal services between 2005 and 2014 was 72 per cent to US$618 billion, almost three times the value of the audit market.
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