BigLaw v BigFour: The competition between law firms and the “Big 4” continues to intensify
July 26, 2019
2 min read
What's going on here?
ALM Intelligence (a consultancy) and Prism Solutions (an IT services provider) report law firms will face more pressure than ever to compete against disruptive players like the Big Four in three major ways.
What does this mean?
The ways in which the Big 4 are set to challenge law firms are as follows:
1) The Big Four are able to differentiate from law firms by providing an integrated, multidisciplinary approach for their clients. PwC, for example, combines consultants, tax and legal advisors in a single team for a complete mergers and acquisitions (smaller scale) package. This is something law firms currently cannot offer.
2) The Big Four have made early investments to harness complementary technologies (particularly process management) to better deliver these “one-stop shop” solutions. KPMG for instance, developed a suite of entity management tools. This helps their clients navigate the global network of regulations in planning their tax structure. Lateral acquisitions, like Deloitte’s Conduit Law offering lawyers “on demand” for lower fees, expands the Big Four’s existing range of cost-friendly legal services. This shows there is a growing demand for the Big Four’s integrated “one-stop shop” approach and they are moving in quickly to capture market share in the legal industry.
3) The Big Four already possess a strong network of corporate clients through their leading positions in audit and advisory business. They have also built highly global legal arms (with a presence in over 50 countries), which means penetration into the legal industry will come at low-risk, particularly against City firms.
Why should law firms care?
As the legal sector increasingly faces competition from other areas, such as AI technology and auditing firms, a Big 4 firm which is able to deliver high quality legal advice can be seen as a huge threat to law firms. This new competition is likely to pose a serious risk to law firms’ profit margins and will limit future growth opportunities if they do not adopt fast-moving technologies. This threat is heightened as other disruptors are already using such technologies. Law firms will need to adopt novel, more innovative ways of delivering legal services.
On this, Prism Solutions troublingly report law firms still struggle with systematic process-related inefficiencies. They stated time is wasted searching for, and being unable to retrieve, key emails and documents (up to 2.3 hours a week) costing them in excess of £50,000 per year. This is something the Big Four have addressed early on, giving them a competitive edge against smaller to mid-tier law firms who are still resistant to technological change.
Although City firms have responded with a wave of “NewLaw” initiatives (like Evershed’s Konexo), with the Big Four’s particular set of strengths, their presence seems to be here to stay as a major disruptive force in the legal industry.
Report written by Roslyn Lai
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