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Big Four law firms as alternative to Big Law?
The provision of legal services by Big Four law firms seems to be a relatively new development – is this a fair assessment?
This perception is a consequence of the various discussions about legal services offered by Big Four firms in the recent past and in particular the discussion whether Big Four lawyers may be admitted to the bar. The true situation differs from country to country. Our firm has been providing legal services in Switzerland for more than 100 years already. However, you are right on a more global level.
I would say that the rise of Big Four legal services began some 15 to 20 years ago, with an initial peak before Enron wiped away Andersen. At the time, Andersen, EY, KPMG and PwC were investing a lot of money to build their own global networks of law firms. And they were pretty successful in doing so until stricter independence rules for audit firms stopped the rise of these networks abruptly. It took about eight years until the Big Four firms discovered or rather came to the conclusion that independence requirements and legal services are not a contradiction in terms, rather a compliance and independence issue. So the global leadership of the Big Four decided to again invest money in building or expanding global networks of their own law firms. As of today, EY, KPMG and PwC once again have some of the biggest legal networks globally. This expansion is obviously accompanied by very strict independence rules for legal services.
What are the main differences in working for a Big Four law practice compared to a traditional commercial law firm?
Having worked in both environments for a considerable period of time, I see various differences – source of engagements, the approach to work, career paths and also the personality of the lawyers.
Let’s start with where engagements come from. An important part of our work is referred to us by – or won together with – our colleagues from other service lines such as Tax or Advisory. We very often pitch together with other service lines for projects requiring multidisciplinary advice or where clients prefer a one-stop-shop approach. Therefore, you need to be a team player if you want to feel comfortable in such an environment. As we all know, most lawyers, however, are „stars“ – a mind-set that is not really compatible with the Big Four environment. Such multidisciplinary and very often cross-border projects also require distinct project management skills, again something which is rather alien to the traditional lawyer.
Moving on to career paths, while it is almost a must to become a partner in a traditional law firm, there are more than one destination ranks in a Big Four law practice. This becomes obvious if you look at the leverage. Our ratio of partners to associates is currently around 1:10, compared to ratios of 1:1 up to 1:3 in traditional law firms.
Is such a ratio not deterrent for younger lawyers?
A few years ago, I would have replied „yes“ without hesitation. However, in recent years I have noticed a remarkable shift in the values and life plans of younger lawyers. It is this generation Y mind-set that makes ratios of 1:10 acceptable to lawyers. If you don’t want to dedicate your entire life to the firm but still like to do challenging legal work and realize your dreams, a Big Four law practice can be the employer of choice. This does not mean that we could offer „9 to 5 jobs“ to our lawyers. And there is, of course, still a place for the typical city law firm partner in a Big Four law practice. Even though a considerable share of our work originates from cooperation with other service lines and our global network of law practices, we still need to win most of our engagements in competition with other commercial law firms. And here you can only succeed if you can face your competitors at eye level.
Do you do things differently?
Yes and no. Obviously, we have to provide the same level of quality as the best in class law firms. Anything else would be unacceptable given that the Big Four would never allow their reputation to be endangered by legal services, which account for less than 5% of their global revenues. So our lawyers are under permanent and strict scrutiny of our internal quality and risk department. However, there are probably different approaches in delivering the work products. Very often, our contribution to a certain project is only one piece of the puzzle. So, we are used to keeping our work as short and concise as possible, the same way as other contributors do. To foster seamless service delivery – another important feature of multidisciplinary services – the use of globally deployed templates is very common. So a client planning an acquisition in Gabon will likely receive the same combined financial, tax and legal due diligence report as it is used to from its transactions in Switzerland or Germany.
Is the Big Four approach to legal services the way of the future?
There is no right or wrong way. In the end it’s a question of what each individual client prefers. Some of them deliberately separate legal services from others such as tax or advisory services. There can be various reasons for that, e.g., a longstanding relationship to their lawyers or the limitation of dependencies on a particular service provider. Others like the idea of procuring as many professional services from one provider as possible to reduce instruction and communication efforts. Therefore, in my view, there is room for both models and both will survive.
Who are the main buyers of your services?
Looking at our client portfolio you will find anything from the private individual who is interested in estate planning to the multinational who engages us to integrate the newly acquired subsidiaries into its existing corporate structure. The majority of clients though are foreign companies requiring legal services in the corporate, commercial or transaction field in Switzerland, or Swiss midsize non-listed and listed companies to which we usually have longstanding relationships. We do not usually act as the main provider of legal services for Swiss multinationals. In this segment, we’re more likely to offer legal services in the context of other services provided to the client or where we have a USP for the specific legal service required.
Jvo Grundler is the Managing Partner of Ernst & Young Legal Services Switzerland. He specializes in M&A and capital market transactions. In his previous positions he worked for another Big Five company in the M&A team and for a boutique law firm as a litigator in maritime law cases. Jvo gained a Master of Laws (LL.M.) at the University of Cambridge (UK) and a doctor’s degree from the University of St.Gallen. The Ernst & Young legal network is present in 56 countries and there are plans to quickly grow the network over the next years. Jvo was interviewed by Bruno Mascello.Read more interviews