Big Four gaining favourability among UK legal space

The Big Four professional services firms are making major inroads into the legal market, according to new data. PwC, KPMG, EY and Deloitte have been bolstering their legal wings dramatically in recent years – a tactic that is reportedly bearing fruit now.

In the last decade, the world’s four largest professional services firms have pushed ever deeper into the legal market. In a campaign that has a striking resemblance to the way the quartet forced their way to the top of the consulting industry, the firms have ramped up their legal headcounts organically, and via a large acquisition drive – leading some researchers to estimate that if they were even “a fraction as successful in law as they were in consulting", they could soon win a combined 5% share of the legal market’s global income – with a combined revenue boost of more than $30 billion.

According to new research from Thomson Reuters, those prophecies may finally be manifesting themselves. Major corporations are apparently “snubbing traditional law firms” while increasingly turning to consultancies and accounting firms for legal advice, the study shows.

Lucinda Case, head of Legal Professionals Europe for Thomson Reuters said, “As we go into a period of economic uncertainty, with rising interest rates and inflation, UK corporate demand for legal services remains robust. What’s unusual about this year’s data is that such a large number of UK corporates are planning to increase both their spending on international legal work as well as their spend on UK legal work.”

The Big Four of PwC, KPMG, EY, and Deloitte are winning the lion’s share of this new work. The firms are the key driver of growth in the alternative legal services provider (ASLP) sector, as UK corporates increasingly turn to them for advice. The researchers suggest that with “large gains in client favourability in the past 12 months”, traditional UK law firms need to be “wary of this development and demonstrate their own ability to handle clients’ work efficiently and effectively.”

While the firms first entered the legal market in the 1990s, the UK’s major audit and advisory firms have only found a significant niche in offering their clients integrated legal services in the last 10 years. Since 2015, the Big Four has captured an increasingly large share of the UK legal sector, according to Thomson Reuters.

Of the Big Four, PwC has made the most dramatic impact on the UK legal space, to date. Around one-fifth of legal services buyers polled by Thomson Reuters noted awareness of PwC, with 11% noting they would favour them when it came to purchasing services. Deloitte, EY and KPMG each hovered around the 10% mark in terms of awareness, and 7% in favourability.

This may in part be due to the broader offering the Big Four is able to supply to clients. As in the consulting space, the firms favour a generalist approach, recruiting widely, while investing heavily in new technology to help pick up any slack. When asked what factors helped them favour a legal firm, clients told Thomson Reuters that experience and track record was not especially valuable – as just 3% saw it as a leading factor – while 12% noted breadth of service was the most important thing to them. Law firms can still count on specialist knowledge being the most important factor to 16% of firms, but as the Big Four continues to buy up smaller specialists, that may also cease to be a source of confidence.

The researchers concluded, “As competition increases from the Big Four and other alternative legal service providers, it will be those forward-looking UK law firm leaders that will take the necessary initiative to cement their firms into the minds of legal buyers in the UK and around the world.”