Managing Legal
I concluded Part 1 of this three-part post by asking:
For business owners and managers, what could the Big 4 accounting firms offer to client companies that a conventional law firm does not?
In his U.S. Law and the Big Four: Who’s Afraid of the Big Bad Wolf?“, Stephen Embry, formerly a national litigation partner with the Am Law 200 firm of Frost Brown Todd — one of the 200 highest grossing law practices in the country — addresses this question.
Embry looks at it from inside the legal profession: What do “we” — conventional law firms — have to fear from the Big 4 accounting firms entering the U.S. market for legal services?
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“The Big 4: Think Different
“What are the Big 4 doing differently that poses a threat [to U.S. law firms]? [Rutger] Lambriex [a lawyer with Ernst & Young’s new legal arm that practices in the U.S.] said it best: ‘We approach problems as business issues that require legal attention’. He continued, ‘you have to understand what the relevant areas of law are (with respect to any problem) but also what are the relevant business issues.’
“So cyber security is not just data breach litigation to use one of Lambriex’s examples, it’s a fundamental business problem that EY [Ernst & Young] is poised to holistically and synergistically solve. Legal plays a role but it is their desire and ability to help clients through the entirety of the business issues that will ultimately enable the Big 4 to make inroads.
“Lawyers? Too many see legal as the tail wagging the dog. Why do clients say they want lawyers to understand their business better? Because we [lawyers] fail too often to see beyond the legal problems. We don’t see that the most important thing is not legal but business. The Big 4 recruit business problem solvers and innovators while lawyers look at pedigree and law school academic records.”
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I agree. And I’d add that the disconnect between what client companies need and what conventional law firms offer them is not just attorneys’ tunnel vision. It goes beyond the fact that lawyers’ preoccupation with doctrinal technicalities abstracts legal problems from their practical business context.
Add this: The business model under which conventional law firms do their work prevents basic efficiencies long-since adopted in other company functions. Embry continues:
“And another thing says Lambriex: EY is looking to standardize legal services, striving for greater efficiencies. He concludes, ‘60% of what lawyers do can be standardized and automated’. 60%. He also notes correctly that lawyers are often doing and charging for work that they are not trained to do. Legal work ‘should be done at the right location, at the right price by the right people’. What a refreshing concept!
“Lawyers? We are too busy billing hours and protecting our turf (and revenue stream) through outmoded professional rules and business models to see what our clients are really seeking.
“Well, you say, lawyers are sensitive to business problems and needs and share their clients business values. Are they? Is imposing a model where you bill by the hour and reward inefficiencies a business value that our clients share? Are perpetuating business models that discourage collaboration and nimble movements and decisions business values we share with our clients? Is failing to use standardization and automation tools and data analytics to get a better result at the expense of reducing billable hours a shared value? The Big 4 understand business. They value business. They share business values and goals.”
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So this ex-partner with an Am Law 200 law firm candidly acknowledges two realities about conventional law firms versus the Big 4 accounting firms as providers of legal services to U.S. companies:
First, the Big 4 accounting firms have demonstrated a business focus, while attorneys in conventional law firms get lost in the weeds of legal minutia.
Second, like most corporate functions — other than legal — the Big 4 accounting firms standardize and automate the “60% of what lawyers do [that] can be standardized and automated.” Conventional law firms, “bill by the hour and reward inefficiencies”.
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Part 3 of this three-part post takes up this question:
Naysayers contend that the Big 4 accounting firms cannot enter the U.S. market for legal services due to “regs and laws” that “preclude Big 4 entry”.
Is that really true?