Below is the introduction of The Big Four Are at the Door – And They’re Better at Meeting the Future Needs of Your Clients. The full report is available on the ALM Intelligence website.
ALM published its Elephants in the Room series beginning in late 2017, diving into the expansion of the Big Four — Deloitte, EY, KPMG, PwC — into the U.S. and U.K.-dominated legal industry, and examining the future of these organizations in that legal industry, with a focus on three strategic scenarios:
- Deepening Focus on Legal Services with an Accounting or Consulting Overlap: The legal arms of the Big Four could remain in their current form – ancillary businesses designed to support the core tax and advisory arms.
- Expanding into a “Full Service” Offering: The Big Four could expand into a wider range of legal services and transform their legal arms’ capabilities into standalone businesses similar to their current tax and consulting offerings. Such a move would bring them into direct competition with leading law firms.
- Developing a Managed Legal Service Offering: The Big Four could develop a range of managed legal services similar to the current offerings of alternative legal service providers.
The Elephants series also compared the Big Four to traditional law firms, which resulted in some interesting findings. While these four organizations certainly are comparable to top global law firms in headcount, their revenue earned from legal services is nowhere near the highest-earning law firms. For example, Latham & Watkins’ 2016 legal services revenue was almost six times that the largest of the Big Four, PwC, and still far more than all of the Big Four combined (Figure 1).
This drastic contrast in revenue has counter-intuitively created more of an opportunity for the Big Four than an advantage for the traditional law firm, though. The corporate legal department client is increasingly looking for alternatives to the traditional legal services model in pursuit of greater transparency and efficiencies, and even more to ultimately solve business problems rather than discrete (albeit potentially voluminous) legal issues. The Big Four are in a prime position to meet this need with a larger global footprint than the traditional law firm – with offices in 72 countries on average for the Big Four versus 29 for the top 10 global law firms (Figure 2) – along with a broad services portfolio and deep technology infrastructure, not to mention longtime expertise in change management, methodology and best practices in myriad disciplines.
This article dives deeper into this fast-emerging reality by looking at the strategic advantage the Big Four have over traditional law firms, created by more abundant and diverse resources available, as well as deeply engrained use of technology and process improvement techniques.
Download the full report here