There are many documents about the entry of the Big4 accounting firms into the Asia-Pacific Legal Markets. The most recent move of note was PriceWaterhouseCoopers (PWC) beginning to offer legal advice in Tokyo beginning last November. Australia’s Beaton Capital traces the history of large accounting firms presence in the region back “to as early as 1850 when KPMG’s predecessor firm established an accounting practice in New Zealand.” Indeed, as 2015 dawns, the Big4 have significant presences in almost all of the region’s major legal markets and either already are – or are aspiring to – compete for legal work in these markets.
And from a competitive perspective vis-a-vis BigLaw — a recent article by Gregory Jordan (former global managing partner of Reed Smith LLP and now general counsel of PNC Financial Services Group Inc) in the Wall Street Journal Law Blog places the advantage squarely with the Big4. Jordan wrote: “Accounting firms such as PricewaterhouseCoopers are “eating law firms’ lunch” when it comes to briefing clients on upcoming challenges—including regulatory and legal shifts. “They have armies of brilliant people who focus on the business in the way that law firms, even the best ones, just aren’t.”
BigLaw vs Big4 in Asia: Advantage Big4
In preparing this blogpost, Eric Chin (@EricJYChin), Senior Analyst at Australia’s Beaton Capital explained to me via email that: “The Big Four firms have now built a substantial scale in the APAC region. [Beaton Capital’s] analysis of the Big Four firms and BigLaw firms in the region reveals their partnership presence (whole of firm, not just law) is already twice as big as their BigLaw counterparts and have been entrenched in the local communities longer. In fact this group of firms have successfully built strong brand reputations, known as ‘top-tier’ and ‘high quality’, which transcend the traditional boundaries of a single profession and geographic borders. The ease with which Andersen Legal grew in the early 2000s demonstrated the competitive advantage they enjoy – global brand and global platform – to scale quickly.
As the APAC region see its state capitalism slowly unwind, family-owned conglomerates mature and countries moving towards a closer integrated economic unit, the need for an integrated business adviser, facilitating all the aspects (accounting, finance, consulting and law) of running a truly competitive business will create a favourable climate for the truly multi-jurisdictional and multi-disciplinary firms. Much like the then Big Five firms’ legal practice in Europe in the mid-1990s to early-2000s, the firms will first conquer the mid-market before moving upmarket for the more lucrative cross-border M&A work. As we have seen in the past, the Big Four will compete for BigLaw’s talent to trade-up their legal gene pool.”
But what of the wider competitive pressures?
Head-to-head competition between BigLaw and the Big4 in Asia is just one of a number of currents of competition currently facing any legal services provider in the region. Others include: Commoditization hastened by new technology; A change in the role of in-house general counsel; Globalization; Changing foreign direct investment trends; Economic growth; A shift from a seller’s market to a buyer’s market; More decisions being made by clients; The appeal of Asian markets to western law firms; Legal market liberalization; The rise of the Internet economy; Price Competition; Intra-Asian law firm growth; Law firm mergers and Alternative Business Structures (ABS).
Perhaps an even larger question is: Is the Big4 more capable of defeating BigLaw (and perhaps some NewLaw competitors) in Asia in the context of each of these additional currents? Therein may lie the answer to the question posed by this post.