Biglaw

Does Biglaw Need Less Lawyering?

How EY’s spin-off announcement is part of a trend that puts the classic Biglaw paradigm at risk.

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ernstyoung logoLooking back in 10 years on an eventful 2022 in the legal industry, it may turn out that the most impactful move of all didn’t even involve a law firm. Big Four accounting firm Ernst & Young has announced that its auditing and consulting businesses will soon be run as two separate companies. Although pundits are calling the planned move the most seismic change in the Big Four world since Arthur Andersen collapsed post-Enron 20 years ago, it may portend a significant step forward in the Big Four’s efforts to seize more of Biglaw’s traditional market share.

On a strictly mechanical level, the split frees EY up from significant conflict of interest problems that were likely hampering its business development. To the extent EY takes back market share it had to give up due to conflicts, part of that will likely come at the expense of law firms.

But it’s the under-the-hood aspects of the spinoff that may be the real story. As reported on Law.com, EY’s Global Law Leader Cornelius Grossmann has set out his vision for the new entity now unshackled from its auditing counterpart. Grossmann sees the new company offering a multidisciplinary, business-focused service where legal services are an as-needed component of the overall process, but not its primary driver.

In other words, EY intends to provide services that are tailored to top-level client needs, rather than a siloed approach to service in discrete areas like tax, auditing, or specific legal challenges. This shouldn’t be a revolution but consider for a moment how ill-equipped most law firms are when it comes to offering that same type of service.

A Tale Of Two Engagements

Imagine that a corporate client approaches an outside labor and employment attorney with a legal question about employment contracts. After the legal team analyzes the problem and answers the immediate legal question, they realize the solution isn’t legal advice so much as it is a need to retool the company’s entire employment contract management software suite. At most law firms, that’s the end of the discussion, because what’s a law firm going to offer there? Most likely the lawyers will recommend finding a prefab solution or hiring a software developer, and then they will move on to the next task and wait for another job to come along. Law firms aren’t great at nonlegal solutions. We’ve got a hammer, so we don’t usually take on problems that don’t look like a nail.

That’s not going to be a problem for a multidisciplinary consultant with a deep bench of experts, though. A legal consultant at a company like EY might identify that same problem, then refer the client to EY’s in-house legal technology department to identify, onboard, and maintain a new contract management system. The client might then be handed off to other EY departments for training and implementation, and then remain in the ecosystem indefinitely as its software and training needs change and grow. As part of that process, EY might refer the client to an outside law firm for consulting about contractual language or a state-specific need — but that interaction with the law firm is much more a spoke in the process than the hub. And when that client has another need in the future, who are they likely to reach out to? It will be the entity that quarterbacked a holistic approach to the problem. By competently managing one complex problem, a multidisciplinary consultancy like EY might end up securing a steady flow of business for years, one that a law firm couldn’t have even begun to service.

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We Need A Bigger Toolbelt

I’ve spoken often in this space about classic Big Law’s functional position as a highly protected group of tradespeople — the plumbers of PDFs. You don’t consult a carpenter about a plumbing problem; you call a plumber, someone who specializes in the problem you need to fix. But when you’re building an entire house, you need more than just a team of plumbers. You need a general contractor to identify, hire, and coordinate the various trades at issue, and that’s the role EY, the other Big Four firms, and the rest of the Alternative Legal Service Provider space are shaping up to fill. What they might lack in depth of legal expertise they can more than make up for in the breadth of other competencies they can offer and the scope of the problems they can help their clients attack.

When I chatted with Liam Brown, CEO of ALSP juggernaut Elevate, a few years back, he called out this model way back before the pandemic even went into full swing. Elevate, which pitched itself as “Accenture for law,” was working hard back in 2020 to fuzz the lines between legal departments, law firms, and legal-facing companies. EY appears to be trying to apply that concept on an even broader scale.

Networking Our Way To Success

Law firms, unfortunately, are for the most part ill-equipped to offer these same sorts of client-centric problem-solving tools. Even the way they structure themselves internally can be a detriment to providing business-oriented solutions. Most firms structure themselves by practice groups. When litigators want to talk about business development, they tend to talk to other litigators. ERISA lawyers talk with other ERISA lawyers, M&A with M&A, and so on. We don’t have many natural avenues to be exposed to one another, and we therefore stunt our abilities to cross-pollinate ideas and think outside of our practice group silos.

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Finding ways to facilitate interaction across practice-group lines needs to be on every law firm management team’s agenda for 2023, but our efforts can’t end there. If we want to stay in competition with the multidisciplinary offerings of EY and its ilk, we need to be expanding our own suite of offerings. We need to give ourselves the tools to offer solutions centered around the customer’s business needs, not just around their legal ones.

But that step only broadens our ability to offer legal services. To really compete, we need to fundamentally re-imagine the law firm’s role in our client’s ecosystems, turning away from our current role as specific tradespeople and into that sophisticated general contracting slot EY is pursuing. Law firm management teams might spend 2023 building out networks of affiliated entities in other business service spheres, while providing training and direction within the firm on how to utilize these new partnerships to earn larger-scale projects. They might even look into hiring full-time project management professional staff to help facilitate these new arrangements. If we want the biggest projects, we need the contacts and expertise to actually build them.

The business world has spent the past few decades getting faster, bigger, and more complex, and there’s no reason to believe the next few decades won’t continue that trend. Law firms can’t rest on their laurels if they want to hold onto their market share and profit margins. We’re at risk of losing our place as many clients’ top-of-mind problem solvers, but there’s still time to get better, think bigger, and keep our spot. The sooner we set our egos aside and realize that we offer our clients just one piece of a much larger puzzle, the sooner we can start figuring out how to offer them everything else.

GoodnowJames Goodnow is the CEO and managing partner of NLJ 250 firm Fennemore. At age 36, he became the youngest known chief executive of a large law firm in the U.S. He earned his JD at Harvard Law School and attended Cambridge Business School (UK), where he wrote his master’s thesis on how to use entrepreneurial strategies to infuse innovation in law firms and established businesses. James is the co-author of Motivating Millennials, which hit number one on Amazon in the business management new release category. You can connect with James on LinkedIn, Twitter, or by emailing him at jgoodnow@fennemorelaw.com.

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