There has been a lot of debate recently about the Big Four accountancy firms (EY, KPMG, PwC and Deloitte) expanding into the legal services arena and threatening the position of more traditional law firms. A new report from UUֱ assesses the competition posed by the Big Four, on the back of a growing cadre of alternative legal service providers (ALSPs), and how some of the incumbent firms are responding to the disruption.
But despite the incursion of the Big Four and ALSPs, it seems that traditional firms are holding their own. recently reported that the average price of legal advice to UK businesses rose by 4% over 2020. In comparison, there was no rise in the fees charged by accountants and a reduction in management consultancy fees over the same period. The conclusion of the article was that: “In a crisis, businesses will always turn to their lawyers first and their consultants second.”
Why traditional law firms shouldn't fear the big four's expansion
The fact that law firms have been able to charge more over the pandemic, whilst consultancies have been forced to reduce their fees, implies that traditional firms may have an advantage over the newer players in the legal market. This may be down to a combination of trust, heritage and experience in a specific field. Whilst the Big Four are highly skilled at implementing processes which optimise efficiency when it comes to more routine legal tasks, many clients will prefer to consult a traditional firm when they are faced with the unknown.
Although the Big Four boast an impressive roster of highly skilled lawyers, they are also famous for providing accountancy and management consultancy services. The multi-skilled nature of these professional service behemoths arguably leads potential clients to opt for a dedicated legal practice for complex matters, even if it’s more expensive.
The Amazon effect: why clients value specialised legal services
Amazon and the big supermarkets have dominated consumer shopping during the pandemic. But although most products can be purchased more cheaply from large online suppliers, many customers will still choose to buy from boutique stores because they are seen as higher quality or provide a more personal level of service.
Although it may be a stretch to compare the Big Four to Amazon, there is a similar principle at play. The “Amazonification” of the High Street may have turned shopping into a cheaper and more efficient experience, but there will always be a market for smaller specialist shops. Similarly, many businesses will prefer to keep their lawyers separate from their accountants, even if they are offered the whole array of professional services under one roof at a lower cost.
Staying relevant: the need for technological adoption and innovation in law firms
Just because traditional firms have some inherent advantages over the Big Four, this does not mean they can rest on their laurels. It is vital that they harness the power of new technology and adapt their businesses to meet the changing expectations of clients. More firms may decide to change to an ABS in order to bring in new investment or form partnerships with technology companies. Managing partners and practice managers should maintain an awareness of the incursions by ALSPs into the legal marketplace, and ensure that they promote the benefits of traditional firms whilst continuing to develop their practices and embrace the future of law.
* denotes a required field
0330 161 1234