The Impact of the expansion of the big four on the legal services market and mid-sized law firms

Abstract

This paper is based on an article by The Economist titled ‘Attack of the Bean Counters’ published in March 2015, which advances the argument that the Big Four audit firms are the biggest underestimated threat to the legal profession today and the firms most at risk from the expansion of the Big Four in the legal services market are the mid-tier law firms. This is attributed to a number of factors, including their global reach, large client base and more importantly their efficient integration of new legal practices. To interrogate these two assumptions, this paper first examines the basis for the rise of the professions in the society, the ‘inability’ of these professions to meet client needs which led to liberalization and subsequent penetration of the market by alternative legal service providers including the Big Four. Secondly, it examines the critical success factors for their expansion in the legal market through the adoption of new legal practices, enabling them to provide cheaper integrated services. It is debatable whether the Big Four are the biggest threat to mid-tier law firms, compared to other legal service providers, but what is certain is that they are an underestimated threat. Lastly, this paper concludes that, based on the current demand gap, the Big Four, mid-tier law firms and alternative legal service providers all stand an equal chance of thriving in the legal market based on their ability to provide cost-effective, and differentiated services that solve their client problems in the long-term.