Law firms are concerned by the “major threat” posed by tech-savvy accountancy firms as the profession expands into the legal market. The accountancy vs legal battle is on.
Pop culture has staged some of the biggest battles, from Godzilla vs King Kong to Alien vs Predator. And a new report from Prism has rung the bell on a new Ali/Frasier-style rivalry to add to this pantheon of fights: accountants vs lawyers.
The report claims that two-thirds of law firms are under “sustained attack” from accountancy firms.
Shouting “fight” from the sidelines is IT service provider Prism. The company's whitepaper found that 45% of law firms surveyed consider accountants to be a major threat.
The Big Four accounting firms are possibly doing the most to stoke law firms’ fears. If Deloitte, PwC, KPMG and EY decide to fully drive their tanks on to the legal lawn, the report predicts they could draw an annual revenue of £23.5bn from legal services.
Law firms are sweating over PwC’s recruitment drive of lawyers, which as of November 2018 counted 3,600. This is the result of the UK's liberalising Legal Services Act in 2007, which opened the door to the so-called “accountancy takeover”.
Accountancy firms and alternative service providers are said to be disrupting the market because they can offer legal services in a more transparent, simplified and fixed-fee manner whilst delivering superior client satisfaction.
According to Prism, another area where lawyers are lagging behind their accounting rivals is in their tech savviness.
It’s here where the accountancy profession has the legal sector on the ropes: "It appears the competition has done the math and adopting tech adds up,” the report states.
The report said that some law firms are still purchasing software which was written decades ago, exposing them to security risks, rising support costs and potential exclusion from new services.
This is reflected in the fact that only 37% of those surveyed by Prism believe their organisation is ready to keep pace with changes in the legal market, such as cost pressures as work becomes more commoditised and clients push for better deals.
The report also emphasises wellbeing and employee engagement to attract talented staff members: something that mirrors the work-life balance conversation happening within the accountancy profession.
To compete with accountants, the Prism paper points out that “Law firms need a fresh approach to end-user productivity that enhances their corporate performance, and to deliver a more personalised client experience”.
And it's not just the Big Four that are arm-wrestling law firms for additional legal services. As highlighted on a recent AccountingWEB podcast chat with accounting firm owner Kylie Fieldhouse (see below), there is increasing interest in areas like probate, and firms like Crunch are expanding into areas as diverse as mortgages, insurance and investments.
The ICAEW has also fought a campaign to become a regulator of reserved legal services.
In 2017, the Institute was hit with a setback in this proposed governance when David Liddington, the then secretary of state for justice, rejected its application to offer legal services. The ICAEW, however, has received hope in challenging this decision, with the new man in charge David Gauke granting an application to administer oaths.
About Richard Hattersley
Richard is AccountingWEB's Practice Editor. If you have any comments or suggestions for us get in touch.