The Big Four accounting firms are reportedly rebuilding their legal service practices, after abandoning much of that area over a decade ago in response to Sarbanes-Oxley restrictions.
An article in the August issue of The American Lawyer predicts that some of the accounting firms will build law firms in the next five years, at least abroad, but Sarbanes-Oxley restrictions will continue to limit their growth in the U.S.
Both PwC and EY are likely to build leading global law firms within the next five years, according to the report, while Deloitte and KPMG have been hiring in the United Kingdom, Germany and Asia. One change in the environment is the recent availability of “alternative business structure” licenses in the U.K. opening the British market to non-law firms. In the U.S., however, Sarbanes-Oxley continues to bar the Big Four from providing legal services to companies they audit.
However, an American Lawyer survey of 100 general counsel and in-house lawyers at leading global corporations suggests the Big Four may have to overcome a bigger problem than Sarbanes-Oxley restrictions, and that’s lack of potential client interest. The survey found that nearly 90 percent of respondents do not think their company would be interested in receiving legal advice from an accounting firm. Almost 70 percent are worried about potential conflicts and over 40 percent question whether an accounting firm will have the required legal expertise. Other skeptics cited concerns about confidentiality, independence and regulatory restrictions. Satisfaction with existing law firm relationships is another factor to be overcome.
Conversely, 18 of the general counsel who were surveyed said they had already retained an accounting firm for a legal matter, usually tax-related, and nearly all reported satisfaction with the service and quality of advice received.