Is the growing incursion of the Big Four accounting behemoths—Deloitte, EY, KPMG and PwC—into legal services the “biggest underestimated threat to the legal profession today”?
This would seem to be a case of elephants threatening mice, as the numbers laid out in this interesting recent Economist piece show:
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- The Big Four’s combined annual revenues of $120 billion exceed the $89 billion generated by the 100 largest global law firms put together.
- By headcount, PwC’s legal division would be the world’s tenth-biggest law firm (and all Big Four’s would be in the top 40).
- Big Four’s aggregate legal market penetration ranges from 4% in China and 6% in Britain to 20% in Germany and 30% in Spain.
As suggested by that final factoid, this is so far a non-American phenomenon. The United States has not (yet?) liberalized its legal market to allow attorneys to freely share profits with members of other professions. As the Economist notes, in those liberalized markets such as the U.K.’s, it is the mid-tier firms specializing in high-volume, repetitive tasks who are threatened most by having to compete for the sort of work that the accountants “excel at standardising and automating.”
Finally, here is a cleverly titled set of charts depicting the relative revenues of the accounting and legal industries:
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Attack of the bean-counters [The Economist]