I have written before about the Big 4 accounting firms and the threat that these firms may pose for U.S. lawyers and law firms.

The response has typically been a bit like that of the first two pigs in the old 3 Little Pigs nursery rhyme who arrogantly believed their houses of straw and twigs would protect them from the Big Bad Wolf. Going into last week’s Legalweek in New York, several legal pundits (and lawyers) made it a point to tell me Big 4 encroachment on U.S. legal can’t happen. That Sarbanes-Oxley won’t allow it. That the Big 4 don’t make enough profits to do it. That they can’t do what U.S. law firms and lawyers do. That the Big 4 isn’t at all interested in the U.S. market. That they certainly have no business or strategic plans pointed in our direction. I was starting to conclude they were right.

 

The Legalweek Big4 Panel Discussion

But if a panel discussion at ALM’s recent Legalweek is any indication, perhaps these pundits may want to reconsider. The panel was composed of head of EY Legal, Rutger Lambriex, (EY is one of charter members of the Big 4), Jeremy Fudge. a lawyer with the immigration law firm, Barry Applemen Leiden that recently formed an “alliance” with the Big 4 firm Deloitte and Dan Packel, the ALM reporter who early on wrote so articulately about the alliance and its possible impact.

Of these panelists, it was Rutger Lambriex who perhaps offered the most telling—and chilling—comments with respect to the state of the U.S. legal market and the future. If his views are shared by the rest of EY and the Big 4, look out.

Lambriex was, of course, quick (perhaps too quick) to point out that EY is not a threat to U.S. big law; instead it’s the way the Big 4 approach things like innovation, efficiency and, well, business issues in general that pose dangers. That’s true on one level: it is these drivers that threaten the status quo. But so far these drivers have not changed U.S law much.

The Big 4 are global service providers to some of the biggest companies in the world. They have or can get the ear of their well heeled clients many of whom routinely hire U. S. lawyers

What’s different with the Big 4 is frankly who they are: they are not just a group of some random fringe bloggers (like me) clamoring for change. Or startup tech developers or alternative service providers struggling valiantly to gain a piece of the legal pie. No. They are global service providers to some of the biggest companies in the world. They have or can get the ear of their well heeled clients many of whom routinely hire U. S. lawyers. And, as I have said before, it is these clients that will ultimately drive change. The fact that EY sees the need for innovation and automation in U.S. legal and has the means and desire to provide it is indeed what makes them so dangerous to the status quo.

The Big 4: Think Different

What are the Big 4 doing differently that poses a threat? Lambriex 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 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 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.

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.

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.

Not Gonna Happen!(?)

But you say, Big 4 isn’t interested in our market. Lambriex says EY already offers legal services in conjunction with their business advice in 80 countries around the world. 80. Right now says Lambriex there are only 2 places EY can’t offer legal services and the U.S. is one.

And listen to what Lambriex says: the U.S. legal market “is a fragmented market and we want to grow” Translation: we see big upside opportunities. “It’s the mid-tier firms in the US that are most at risk.” Translation: we see lots of opportunity there. He goes on, “law firms must change their business model, or many won’t exist in a few years.” And finally “our clients are very upset with the way their lawyers treat them”.

Sound like a guy not interested in our market? Does all this sound like a guy who hasn’t studied the market and doesn’t see a golden opportunity? After all, in 2017 the size of the U.S. legal market was estimated to be almost $101 billion— and growing. And EY alone has already pledged $1 billion to study and drive innovation.

You say our regs and laws will preclude Big 4 entry. The alliance between Barry Appleman Leiden and Deloitte belies that theory. They already found a way;  just like ALSPs and some law firms have found a way to ally and grow together profitably without running afoul of the legal regulations. And if corporate America, who the Big 4 represent, starts demanding a loosening of regulation, will the legal industry be able to withstand the pressure?

What’s In It For a Law Firm?

But you say law firms will resist this tooth and nail and will never marry themselves to the Big 4. But Fudge says, “we saw the Big 4 moving into the immigration space…and saw them offering the entire package of immigration services, not just legal”. And Fudge notes that one advantage to his firm is that Deloitte and its brand is known everywhere. So, when a global Delottie client needs immigration services in the U.S., who will it turn to? You got it. Not only this, says Fudge, but “the Big 4 has a war chest that helps share the costs of things like technology” and makes what was not affordable, affordable.

Global connections. Expertise in any business problem. The ability to spread r and d and technology costs globally among thousands of partners. EY can easily commit to spending big dollars because those costs are spread far and wide. No wonder Lambriex thinks the second tier law firms– who have to spread such costs among what? 20 partners? 30?– are in trouble.

That will never happen…until it does.

What’s Going to Happen Next?

Where do we go from here? I think we will see more and more Big 4/ law firm “alliances”. We may see the Big 4 gobble up some of the ALSPs; it just makes too much sense on both sides for this not to happen.

And at some point, a global or national large U.S. law firm will break from the pack and ally, merge or combine with one of the Big 4. When that happens, it will be a race for the rest of big law with 2nd tier trying to join in where they can. Does this sound a little bit like the consolidation that occurred within the accounting industry creating the Big 4?

And what does it mean for the legal profession? Perhaps it finally means the big changes so many have predicted will finally happen . More efficiencies. Better quality service. Legal placed in proper context within business. And guess what? That’s what our business clients really, really want.

So, before you join the naysayers that say the Big 4 can’t, or wont, think about Lambriex’s comments, comments made, by the way, not in private but in a highly public forum in front of BigLaw at the premier BigLaw legal conference, Legalweek. (Lambriex and EY obviously have so little fear that U.S. law will change that have little concern about publicly revealing  their roadmap).

Think about the advantages to business clients the Big 4 offer. Think about how their approach meshes coherently and consistently with business values.

And remember the old saying: that will never happen…until it does.

Photo Attribution

 

@jeroenbosch via Unsplash

So, as promised in my general post about Legalweek last week, here are my thoughts about the three most innovative and relevant products I saw at this year’s Conference (plus one).

As I said before, none of the three is groundbreaking in and of themselves. None will change the way we fundamentally practice. But taken together and added to any number of other products that are designed to address particular pain points, they collectively move the needle in various ways from efficiency to life balance. This is what good product developers do: they find a problem and try to solve it. Forget saving the world. Continue Reading New and Hot At Legalweek? Zero. Windtalker. LoopUp. And Casepoint

Legalweek is one of the preeminent legal tech shows. For years it primarily was directed to the ediscovery community; while there is still a heavy emphasis on ediscovery, the Show has branched out signigificaly in recent years. Put on by the legal media Goliath, ALM, it occupies 4 full days of programming,  mammoth exhibit halls and, of course, numerous vendor parties.

As it began to wind down on cold Thursday afternoon, I took a break and sat down in the Plaza Hotel lobby bar to reflect. The Plaza of course is a grand dame of New York hotels featured in movies as diverse as North by Northwest and Home Alone 2. It’s a great place to sit, reflect, people watch, have a glass of wine and write. Continue Reading Legalweek Musings on a Cold Day in New York

Roy Storm of ALM broke the news early this week that Casey Flaherty, owner of the consulting firm Procertas and former GC of Kia along with legal pundit Jae Um will join the legal bemouth, Baker McKenzie. They will join recently added David Cambria, affectionately called the “Godfather of legal operations,” in an effort, according to the firm, to  “reengineer the delivery of legal services.”

When I first heard the news, I was reminded of (and tweeted out) the question posed to Winston Churchill: “Sir, are you ready to meet your maker?” Sir Winston’s response: “Yes but is he ready to meet the likes of me?” And that’s the big question here. Continue Reading Cambria, Flaherty and Um to Baker McKenzie: Is Baker Ready For the Likes of Them?

 


It’s not often I disagree with Joe Patrice, who frequently writes for Above the Law. For one thing, he’s a lot smarter than me. For another, he’s a better writer. In fact, about the only thing I have on Joe is several more years of wear and tear in the trenches. That doesn’t make me right but maybe gives me a different perspective.

Joe recently wrote an article the premise of which, and I paraphrase, was that automation and technology are depriving junior lawyers of the training and experience lawyers used to get when they began practicing. Continue Reading Junior Lawyers Going Extinct. I Disagree. Wait…I Agree

 

Why Is EY Willing to Invest $1 Billion to be Innovative? 

Sports Illustrated used to have a column entitled Sure Signs the Apocalypse is Upon Us which included references to often bizarre and ironic events. It was a favorite of mine since it was a satirical poke at the seriousness we take sports and a display of the humor of everyday existence.

Unfortunately (or perhaps fortunately depending on your perspective), the gradual and continual onslaught of the Big 4 accounting firms into traditional areas of legal practice and encroachment on law firm clientele seems destined to ultimately disrupt the practices of traditional law firms particularly at the mid-tier level. I have written about this before and while I and several others keep trying to suggest the Big 4 is coming, the message doesn’t seem to resonate. Continue Reading Sure Signs the Apocalypse (Big 4) Is Upon Us

Last year, while attending the Consumer Electronics Show, I wrote a piece on how technology  might end or substantially reduce the need for litigators. The idea was not that technology would do the job of lawyers-no robo lawyers please, although after hearing about IBM’s Project Debater, I’m not so sure-but that technology would end or reduce the number of disputes on which lawyers feed.

This year, I remain even more convinced that technology can reduce the number and the nature of disputes that exist because of its ability to record and/or flawlessly trace events. I am also starting to believe that the skill set future successful lawyers will need to have will be more technical in nature than ever before. Continue Reading Will Technology Mean the End of Lawyers?

 

 

One of the benefits from being a blogger and writer is opportunities to attend media events and look at products sooner than perhaps  others get to. One prime example of this is the Consumer Electronics Show that is going on this week. CES, as it likes to be called, is one of the biggest trade shows and occupies almost all of Las Vegas for the better part of a week. It boasts 4500 exhibitors and some 185,000 attendees. So it can be kind of daunting.

I’ve been coming now for several years and one reason I like it is that it’s outside the LegalTech realm. Different ways of thinking and talking about tech from legal that is refreshing and thought provoking. Continue Reading CES 2019 Day 1: Unveiled, Catalyst and, Yes, LexisNexis

I was so much older then, I’m younger than that now. Bob Dylan

It’s certainly commonplace to do an end of the year post reflecting on what happened during the year and the highlights and lowlights. But in my case, 2018 was anything but commonplace. It was a year in which my world–professional and personal–was turned inside out and upside down.  A year when the impossible, the improbable and the unthinkable occurred. A year I learned acceptance. Continue Reading My Year of Acceptance

Should You Consider the Surface Go?

Earlier this year, Microsoft came out with a miniature version of its workhorse Surface Pro. The smaller version, called the Surface Go has a 10 inch display with a 1800 x 1200 display ratio and comes in various configurations and memory. Just like the Pro, you have to pay extra for the keyboard and pen that goes with it. Continue Reading Looking For a Last Minute Gift for a Lawyer?