Is the sun beginning to set on the Am Law 100 empire?
While everyone freaks out about artificial intelligence stealing their jobs, perhaps they should be a lot more worried about the global megafirms staffing up in their midst. Creatures of habit that they are, lawyers cling to their tried-and-true business model like a redneck to a J.E.B. Stuart statute, but the Big 4 haven’t been sleeping on the opportunities in the legal market and have steadily built themselves armies of lawyers, with one accounting firm boasting around 2,000 attorneys around the world. Those aren’t lawyers in their legal department — they have a lot of those too — those are just the lawyers ready to perform work for clients.
Work that used to go to law firms.
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In a world where demand for legal services continues to decline for most law firms, genuinely consider a future where four of the most powerful, deeply resourced companies in the world are waiting in the lobby before your pitch.
Does that seem far-fetched? Well, ALM Senior Analyst Nicholas Bruch, who helped put together a comprehensive report on the Big 4’s place in the legal landscape, notes the uncanny similarities between the Big 4’s legal buildup and the gameplan they used to conquer the consulting business years ago. He notes that firms like PwC and Deloitte are on a buying spree, snapping up lawyers in key practice areas that dovetail perfectly with existing consulting and accounting work. Bruch doesn’t see any of the Big 4 transitioning into a full-service law firm — at least not in the foreseeable future — but that doesn’t mean they can’t take big swigs out of Biglaw’s milkshake.
In fact, the Big 4’s shadow loomed over Legalweek far more than AI or blockchain. According to American Lawyer Editor-in-Chief Gina Passarella, in the Business of Law Forum for law firm leaders held during last week’s show, one person noted, “if the Big 4 really wanted to they could obliterate this conference.” That day may be coming sooner rather than later.
PwC is already arguably the premier labor and employment firm, and tax and M&A work are low-hanging fruit for megafirms that have pre-existing relationships with nearly every member of the Fortune 500. They’re already poking into Europe and possess among the strongest brands in Asia, giving them an in with the big players coming out of overseas markets. When it comes to a pitch, will an up-and-coming Asian company moving into a new market select a white-shoe law firm or the company that’s been at their side for a decade?
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It’s not just proximity either. Bruch highlighted one small, but potentially critical distinction between Biglaw and the Big 4 — law firms tend to approach entrepreneurs and startups with the language of “advice” while the Big 4 approach with the language of “solutions.” This may sound like a stretch, but a relationship of trust is often founded on speaking the same language.
Biglaw will fire back that they provide bespoke legal services that the Big 4 can never match because Biglaw has a penchant for imagining themselves as special snowflakes. Maybe they’re right. E&Y is probably not going to be conquering litigation any time soon, but how well will the Biglaw business model hold up if firms start seeing significant bleeding in the run-of-the-mill tax and corporate work that pays the bills?
Whenever the subject of Big 4 infiltration has come up before, law firms tend to cluck their tongues and cite America’s regulatory firewall. The Big 4 can’t advise their audit clients! Sure, but what about their purely consulting clients? Partnerships including non-lawyers can’t practice law! Yet the scope of what constitutes legal practice is very much in flux. Just how much tax advice — even coming from a lawyer — is legal as opposed to consulting? There’s a lot of slack in there for the Big 4 to siphon off business. And at a certain point, regulations change when reality forces the matter.
All that’s left to consider is how the invasion comes to pass. James Goodnow points out that PwC has already planted a small flag in the U.S. and is adamant that its focus on international law isn’t a barrier to future expansions into other practices. On the other hand, the Big 4 might not try to set up their own shops at all as much as swallow up regional firms in a Verein model. After all, the Verein structure is old hat to the Big 4. The losers, as usual, will likely be the Am Law 51-200. Boutiques will continue providing narrowly tailored bespoke services and the elite global firms have reputations that approach if not match the Big 4. But that juicy middle of the Biglaw market is exposed.
No matter how this all plays out, the Big 4 represent an existential threat to the American legal landscape. Who ends up winning and losing in this new world remains to be seen, but it’s safe to say the market will look very different in five years than it does today.
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Joe Patrice is an editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news.