CAN A LAWYER CHANGE THEIR SPOTS?

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.

Business First - - LAW -

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 nonac­coun­tant 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.

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