Large Law has followed accounting firms down the path of national and international combination and consolidation. Law firms offering consulting services could be the next move, writes veteran consultant Stephen Moss.
Large law firm models have changed very little outside a handful of innovative firms, few law firms have dared to step into the brave but not-so-new world of consulting. In doing so, law firms continue to forego a goldmine of management talent, with many of their senior staff having held wide-ranging positions in a range of different industry based roles. Furthermore, many associates leaving the law have followed a well-worn path into a number of popular consulting firms.
Whilst a large amount of intellectual capital within law firms stays idle, the consulting industry continues to drain talent that progressive law firms could turn easily into revenue.
With cautious steps being made by law firms into a range of different areas, how long is it until the traditional “law firm” structure changes?
Not surprisingly, the large accountancy firms have already muscled onto the law firm patch.
With the Big 4 professional service firms moving into legal services, how long until we see one of the big law firms reversing the trend and transforming into one of these professional services behemoths?
MIND OVER LEGAL MATTER
After studying law and fresh from a career as a psychologist, I was first thrust into the world of professional services firms on the back of the first wave of diversification of accounting firms into a relatively new field called “management consulting”.
Riding the wave of the popularity of the “corporatisation” of professional services firms, I was able to build a practice amongst an old guard of auditors and tax accountants, as a partner of Coopers & Lybrand (now PWC).
While many partners at the time supported and embraced the change, there were a number of hold-outs who were hesitant to accept this “upstart non-accountant partner” infiltrating their sacred ranks. As the work and revenue continued to roll in however, these doubters reduced in number and volume.
Similarly, the consulting market continues to grow across the world, and in Australia amounts to a $6 billion dollar industry. Bouncing back from a brief exile in the late 1990s in the wake of the Anderson Consulting collapse, the “Big 4” continue to hold a large market share of this work, with Deloitte, PwC, KPMG and Accenture (formerly Andersen Consulting) holding 40% of this market. The players so far include Freehills, who owned Mainsheet Corporate before spinning it out to PWC, Minter Ellison, who recently launched a consulting division under ex PwC managing partner Tony Harrington, and Hogan Lovells, who have launched an international consulting offering.
While conflicts are obviously a live issue, as accounting firms have learnt, law firms are much better equipped to deal with these eventualities. Furthermore, the advent of Multi-Disciplinary Practices (MDPs) in the UK and Australia and the expansion of accounting firms into legal practices organically would seem to mitigate against the status quo.
If law firms are going to prosper against their well-resourced competitors, the use of their talent for the best result for the client is essential. If law firms lack the right talent, or are unable to build the necessary processes through existing staff, then acquisitions and consolidation can fill that gap.
The good leaders will not ignore the potential of their staff and the potential for uncaptured revenue. So watch this space in the legal services arena.
Dr Stephen Moss is the Chairman at Eaton Capital Partners, a corporate advisory and M&A firm specialising in the professional services sector including legal, management consulting and engineering.