Current news almost always creeps into the conversations during client feedback interviews. And lately, we are hearing a lot from sophisticated clients about the growing focus on managed services and the increasing legal professional headcounts in the Big Four accounting firms. As you would expect, it’s the tax and M&A folks in companies that have the most exposure to both accounting and law firm advisors and have pointed out some observations and key competitive advantages provided by the accounting firms.
The biggest distinction is the consistency of the client experience across functional and geographic areas. Accounting firms are perceived as providing processes, project management, leverage, teamwork and quality control more consistently than law firms where the experience often varies dramatically from practice to practice and office to office. One client recently said, “On the accounting firm side, there is more of a leveraged arrangement, and they often need to rely on knowledge from their national practice. In accounting firms, the quality control is more pronounced to ensure more consistency across the firm. I find that the lawyers who are almost always billing by the hour are more directly involved [in the work] vs. leveraged and there is less focus on quality control or consistency. It’s more dependent on the individual lawyers.”
Accounting firms are perceived as providing processes, project management, leverage, teamwork and quality control more consistently than law firms where the experience often varies dramatically from practice to practice and office to office.
That dependency on individual lawyers is another key distinction we observe and, in my opinion, a big challenge for law firms. When asked about recommending a law firm, clients are often hesitant about it. Most admit they hire and recommend individual lawyers—not firms. So when companies go through convergence programs to reduce outside firms, they still make regular exceptions to “the rule” and hire individual lawyers who they know, trust and like and who have delivered results. But despite those times when an individual relationship is a positive for the firm, the relationship is typically much more vulnerable when the loyalty is to the individual rather than the firm. While the clients have good relationships with individual advisors within their accounting firms, they don’t say, “If he or she leaves the firm, I’ll follow.”
Accounting firms have had sophisticated client account management practices for decades and will undoubtedly apply that expertise as they expand their legal offerings. From the 1970s to the 1990s, my father served as a leader on a number of key client teams and for the national tax practice for Ernst & Ernst, Ernst & Whinney and then Ernst & Young. I can recall his commitment to his teams and to the clients. He frequently worked onsite with different clients on a biweekly or monthly basis. Until law firms recognize the value of investing time and resources in developing robust client account management practices, the Big Four will remain a growing threat.