Risky Business: Dentons bite back with launch of risk consulting business
August 16, 2019
2 min read
What's going on here?
Dentons, the world’s largest law firm by number of lawyers, has launched a risk consulting business to provide advisory, assurance and remediation services to its clients.
What does this mean?
Risk consulting is a professional service, traditionally offered by accountancy firms (such as the Big Four), that helps clients anticipate and respond to regulatory, economic and political changes. That legal giant Dentons has moved into this space is noteworthy because risk consulting is distinctly not a legal service. With the launch of this business Dentons hope to provide a more holistic service to clients, as well as a boost to their revenues.
What's the big picture effect?
It’s possible to trace the inception of Dentons’ risk consulting business to the Legal Services Act 2007. This statute inspired a shake-up in the legal services market by allowing non-legal outfits to offer legal services through “alternative business structures”. Since the changes came into force between 2008 and 2011, non-legal multinationals such as BT and Tesco have begun to muscle in on the legal services market.
As competition has increased, and owing to the particular growth and success of legal departments at the Big Four accountancy firms, law firms have been forced to justify their relevance. Several firms (like Dentons) have begun to offer non-legal services to existing clients, remoulding their image as end-to-end problem-solvers as opposed to technical experts. If done successfully, they stand to move up the value chain and protect their revenues. This is all the more important in the current market given that research shows demand for legal services has flat-lined since 2011.
Dentons in particular is making aggressive moves to secure new sources of revenue. Earlier in the year they also launched a UK Regulatory and Trade group to offer a comprehensive service to all clients. These moves were made possible by the firm’s 2015 merger with Chinese firm Dacheng, which saw it become the largest firm by headcount and opened up business in various new jurisdictions. They had two options when it came to establishing a risk consulting business; rather than partner with a non-law firm to offer consulting services, they created a new branch of Dentons and poached industry professionals from rival firms (known as lateral hires). This may prove to be a shrewd move because communications between a law firm and their client are better protected by the rules on privilege than communications between client and consultant. One thing is for sure, consultancy firms and law firms remain on a collision course and there is every risk that some of each will become obsolete.
Report written by Sam Denison
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