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It’s probably fair to say that no one believes the Big Four accounting firms will ever swoop in and replace the top-tier law firms – well, not any time soon, anyway.

They first entered the legal services market in the late 90s, and amongst a flurry of hype and several high-profile client wins, were ultimately bought down by globally-enforced regulatory changes.

But instead of mimicking the business models of law firms, the Big Four have seamlessly woven technology, project management and process management into their new offering to add even greater value to their clients.

This digitally-centric, client-first approach is more aligned to what you’d expect from an alternative legal services provider (ALSP) than a law firm – which raises the question, are ALSPs now at risk from the slow but steady rise of the Big Four?

What legal services are the Big Four offering clients?

The regulatory changes first introduced in 2007 means non-lawyers can now own and manage legal services – and, as a result, there’s been a wave of entrepreneurs, tech-experts, consultants and former-lawyers setting up shop in the market.

With these laxed regulations in place, and with the growth in ALSPs warming the market, the Big Four are now eager to expand their alternative legal services offerings.

“The last time they tried to enter the legal profession in the 1990s, their strategy was we’re just like law firms only bigger. But that’s not their strategy anymore. Their strategy is we provide a different kind of offering, moving from a fee-for-service model to an integrated solutions model,” says David Wilkins, Lester Kissel Professor of Law at Harvard Law School.

“The Big Four can offer a far higher integration of technology, project management and process management; they employ a huge number of people across a huge range of specialties and they are way more global than even the most global law firm. This is why, for many kinds of issues that companies face, it’s a very attractive offering,” says Wilkins.

What has also changed is the type of work the Big Four are going after. Instead of focussing on the highly competitive upper crust of legal work, they’re going after the more day-to-day, says Wilkins.

Strategically, this is a smart move on their end and may help to strengthen client relationships. In-house teams are being bogged down by routine, repetitive work that adds very little value, and there’s a strong demand to free up time to focus on the bigger work.

“If you talk to most general counsel, they will say if they had the capacity and the expertise they would keep all the really strategic complex work for themselves because that is institutional knowledge. But often they just don’t have the capacity or the expertise because so much of their time is just dealing with the day to day and the demand for doing more with less,” says Anup Kollanethu, UK Head of Legal Managed Services at EY. “You put those factors in play and you can see why the ALSP market has grown so much.”

The Big Four have also moved away from billing on an hourly basis, instead opted for a managed services model.

“I don’t want to ever be offering managed services under a billable-hour model because we need to be incentivised to do the work as efficiently as possible and that means making the best use of technology,” says Emily Foges, Lead Partner for Legal Managed Services at Deloitte.

“The vision for Deloitte Legal has always been that you bring together high-quality legal advice with legal management consulting, legal managed services and legal technology. This way you can provide a complete end-to-end service to the client and achieve the outcomes they are looking for, not just give them advice on those outcomes.”

As accounting firms, the Big Four tend to get classified as tax lawyers – and while tax litigation is a huge part of their business, these firms are quickly expanding beyond the scope of tax, including corporate, commercial and employment law and more.

Read our Big Four report for client names, revenues and employee growth figures.

How can alternative providers compete with the Big Four?

Competing with the Big Four won’t be easy. As Bea Seravello, Co-head of Baretz+Brunelle’s NewLaw Practice, commented: “They are much more of a machine; they’ll go wherever the greatest opportunity is for them.”

However, there are a few ways ALSPs can stand out in the legal market.

One unique element is on price. The Big Four don’t adhere to the billable hours model, however, when you break down their integrated managed service models over the course of a year, the costs can quickly add up.

ALSPs, on the other hand, are often much smaller, with fewer overheads such as salaries, office space costs etc., meaning they can offer innovative legal services at a much cheaper price.

When sourcing a legal services provider, in-house teams are primarily focused on two elements - cost and volume, says Dana Denis-Smith, CEO and Founder of alternative provider Obelisk Support.

“ALSPs are often more cost-effective and have more mixed delivery models. For instance, some have offshoring centres in India, and the cheaper states in America, so they have the global footprint that enables them to deliver volume and at a relatively good price.”

Another area that these firms can compete on is technology and innovation. It’s easy to forget that the Big Four aren’t tech companies – they’re accountancy firms with a technology function – while the majority of ALSPs are digitally-native and can move at breakneck speed.

Nigel Rea, Service Development Director at legal services provider LoD (Lawyers On Demand), also agrees on the depth of solutions that a balanced ecosystem can provide.

“If you engage newer providers, you’ll most likely find people move twice as fast, and you're more likely to get some interesting outcomes because we are coming to things with fresh eyes.”

“There's no easy win for us because we haven't got the traditional 20-year panel relationship. But that means, to be successful, we have to move twice as fast, be twice as creative and bring fresh thinking.” 

It’s also worth bearing in mind that the Big Four may open the door for ALSPs. Right now, alternative legal providers often get placed in a separate room from their law firm counterparts and are forced to compete against each other rather than all providers, says Denis-Smith.

“This approach creates an information barrier that doesn’t work in their favour. To get the most from a legal services provider, you really have to create competition across the market and recognise that not every supplier covers every single service line you need, but you need to give them access to the same level of information and knowledge to be able to help you.”

However, given the Big Four’s closeness to the C-suite and GCs, they might be able to prove the case for alternative providers – or at least get all providers placed in the one room.