Boasting unrivalled access to technology, existing tax and consulting expertise and the ability to bundle a variety of services, the Big Four’s legal expansion in Asia has triggered much anxious speculation. But is it warranted? ALB recently sat down with lawyers associated with Deloitte, KPMG, PwC and EY to ask them the burning question on the mind of the industry: Should traditional law firms be scared?
As the Big Four professional services firms expand their legal offerings in Asia, one can’t help but marvel at the sheer scale of their resources. Today, KPMG boasts more than 2,300 legal professionals across 76 jurisdictions, Deloitte upwards of 2,400 in more than 80 countries, EY has a legal headcount of around 2,200 in 80 countries, while PwC has more than 3,600 lawyers in 98 countries. The manpower may already be in place, but when it comes to positioning themselves as trusted legal brand, this is still a work in progress.
Despite the visible amount of investment, Patrick Yip, Deloitte China’s vice chair says there is a misconception the Big Four firms aren’t “serious” about providing top quality legal services. Deloitte, which recently established an affiliated firm in Hong Kong, named JE Jamison & Co, may have been the last of the Big Four to enter the Hong Kong market, but that doesn’t mean they’re trailing behind in terms of ambition.
Likening the Big Four’s legal offerings to Uber – a market disrupter that offers clients more choice at a competitive price – Yip warns that in the future the agility and scale of the Big Four will prove a challenge for traditional law firms in the future, and this may trigger consolidation amongst the bigger law firms, but in the meantime, he says “I don’t think they need to be that worried since the market for legal services is big enough for everyone and competition is just a fact of life”.
Stuart Fuller, ex-global managing partner at King & Wood Mallesons, and now head of KPMG Law, says the view that its either “Big Law or Big Four” is not correct, and the competition between the two business models is “significantly overstated.”
“At one level I think the law firms look at it and think KPMG and our peer competitors have a significant scale of revenue, of geographic reach, of client relationships, and investment in technology,” Fuller says. “But what law firms have is an established and accepted brand in the market to do legal services and a client that understands what a law firm does and has a depth of expertise. These are two sides of one coin.”
“Certainly, the approach we take here at KPMG Law is there is substantial collaboration between us and law firms, even with a KPMG legal presence in a number of core markets,” he says.
SERVICES FOR THE FUTURE
It’s obvious that technology is an essential part of the Big Four’s strategy and its future, both through their investments and their comments. But it doesn’t only serve to grow their services; technology is also opening new areas of work.
For Rachel Eng, managing director of Singapore-based Eng and Co., a member of the PwC legal network, being able to watch the development of new technology up close, is a great advantage of being a part of the Big Four family, and one that also allows her to monitor future tech-generated opportunities.
“I also see the vast amount of thought leadership content and knowledge accumulated within the firm. This allows me to tap on the right opportunities to offer to our clients, thus enhancing our service offering,” says Eng, who is on PwC’s global legal leadership team. In turn, these tools are also selling points for her clients, as they refer them across other PwC network firms for additional add-on services.
Rossana Chu, co-managing partner of EY’s affiliated firm in Hong Kong, LC Lawyers, lists out EY’s tech services which include “legal function consulting, contract lifecycle management and enhancement of the regulatory compliance functions.” She says these tools enable in-house lawyers to “implement routine legal work in a more efficient and smart manner so that they focus on key tactical and strategic matters and thus also help drive ongoing performance improvement,” adding, “EY is renowned in providing legal operations services and technology-enabled solutions that help clients to transform the in-house legal functions, in line with the business transformation of their organisations.”
Yip says this emphasis goes hand-in-hand with the market entering a new phase “that is a lot more technology-driven, in terms of making sure things are done effectively, and in an efficient manner, no matter where the relevant resources are located,” he says, adding that globalisation has also seen distances effectively erased.
With a global network to draw on, in addition to adopting this outward-looking mindset, Deloitte Legal’s focus on developing tech tools is an advantage that can directly add to the client’s bottom line. “By leveraging the whole suite of technologies that it has developed, Deloitte Legal will be able to help clients obtain consistently high-quality legal services at a much lower cost,” Yip adds.
EXPANDING THE POOL OF LEGAL WORK
With plenty of opportunities on the horizon, the Big Four view themselves as a key part of the evolving legal landscape. For Eng, her work is increasingly focused on her clients’ highly complex business issues. “Quite often, clients need professionals from several disciplines to come together to solve their problems. This gives us an advantage as the network enables us to very easily gather cross-disciplinary experts to brainstorm the clients’ issues and come up with a holistic solution. For example, if a client needs to restructure his group of companies to make it more efficient, there is an advantage to bring together both tax and legal expertise when proposing a group structure,” Eng says.
Chu also agrees her firm’s partnership with EY is creating further legal work, despite contrary general opinion. In fact, she says clarifying the misconceptions held by the public “especially lawyers in Hong Kong,” is “the main challenge” of being associated with a Big Four firm. Among the most common myths are that the Big Four will suck up all the legal work and EY packages legal services as part of its proposal, she says, adding neither is the case.
She offers an example of how her firm is able to stimulate further work, noting that LC Lawyers may identify legal issues that are not initially visible to EY’s clients, which may then be referred on to other law firms “when we do not have the capacity or expertise to advice on those areas,” Chu says. Additionally, “the client has freedom to choose EY only, our firm only, or, where the situation is appropriate, both EY and our firm,” she adds.
While Fuller agrees that technology is a key advantage the Big Four have, but he says it is also another area where there is a developing demand for legal work where it previously didn’t exist.
“The way I look at it, there are areas of business, and therefore policy and law and regulation, that are emerging at quite a fast pace,” he says. “If you look at the use of technology, the use of AI and data, clients’ use of data to make their businesses more efficient, or commercialising data, and you look at FinTech and TechFin platforms that are emerging, these are areas where an organisation like KPMG – where we have significant advisory and consulting strength and then project implementation strength across those areas – can add in top tier legal capability to work alongside our colleagues in advisory or consulting actually develops a market and helps our clients to generate business in new areas,” he says.
Fuller also expects there will be more opportunities for KPMG to work with existing firms in the future. “There are core areas of practice where I have no intention of building a legal capability because it does not play to the advantages of KPMG or where we see growth opportunities in the market or emerging areas of practice, where we can get great talent and then establish good value for clients. In each of those other areas, where KPMG would generate legal work, we would look to collaborate,” he says.
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