New research suggests that the ‘big four’ professional-services firms are expanding their presence in the global legal-services market.
Deloitte, KPMG, PwC and EY are now taking a share of the work traditional firms usually count on, according to the biennial research by Said Business School, reported by the Law Society Gazette of England and Wales.
Revenues from this part of their business have now reached US $1.5 billion, a 5% compound annual growth rate from $900 million in 2015, and $1.2 billion in 2017.
“Even though their growth hasn’t been as fast as some other alternative legal-services providers (ALSPs), they still stand to be strong competitors, both to independent ALSPs and law firms,” the researchers said.
Broader presence
They added that EY was looking to triple its number of lawyers in the UK and Ireland in the next three years, and PwC was planning to double its legal headcount.
As competitors, the big four are showing a more broad-based presence, increasing the likelihood that firms will compete with them in multiple service areas.
They are most competitive in merger-and-acquisition due diligence, as has been noted by just over 40% of firms that have competed against a big-four firm in this service category.
The Gazette says that, in the past two years, the four appear to have become more competitive in areas such as litigation-and-investigation support, and contract management and abstraction.
Early focus on M&A
Prof Mari Sako, whose research was the basis of the report, told the Gazette that the big four had had a presence in the legal-services market in the UK since the Legal Services Act 2007.
“The big four started with areas that are closely linked to their core business, assisting clients with the tax-compliance and accounting aspect of M&A,” Sako said.
“As they go further into becoming full-service providers for corporate clients, it does make sense to expand their service offering.”
She added that all four firms had their own client base from their main businesses – auditing and accounting.
“This client base is the basis for offering legal services as well. They would find it more difficult to seek a different set of clients,” Prof Sako stated.