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Michael O’Dwyer
Lawyers tend to see themselves as sharply different from consultants — as masters of the long, legal document rather than the PowerPoint presentation. But, now, the two professions are encroaching on each other’s territory with increasing vigour.
“They’re stealing our lunch . . . but we’re stealing their dinner,” claims one partner at a City of London law firm.
As businesses expand their legal and compliance departments, lawyers and consultants alike are identifying new kinds of demand from clients. These range from business advice arising from legal problems to help with humdrum projects such as regular midsized mergers and acquisitions, and managing thousands of commercial contracts.
At stake for consultants and lawyers is a slice of the growing legal services market, worth £37bn in the UK alone in 2020, according to data provider Statista.
Clients are left picking up the pieces . . . You’ve got HR teams who are then trying to make peace with the unions
Law firms that specialise only in technical legal work “are going to be left behind in the future because clients want lawyers . . . who understand business,” says Kate Dodd, co-head of the equality law team at Pinsent Masons. The firm has branched out into advising clients on gender pay gap reporting and gathering data on employee diversity, and Dodd’s 35-strong team includes employment lawyers working alongside diversity and inclusion consultants.
Traditionally, the role of a lawyer in these matters would have been advising a client on a legal claim for discrimination, says Dodd. But, even if they win these cases, clients are left “picking up the pieces”, she explains: “You’ve got HR teams who are then trying to make peace with the unions.”
So, instead, lawyers and consultants now work side-by-side to help companies “get to the root of the issue”, says Susannah Donaldson, co-head with Dodd. Improving workplace culture or focusing on diversity will stop problems arising in the first place.
Lawyers’ knowledge in areas such as discrimination and data privacy law helps ensure data is collected correctly, but adding consultancy can improve response rates and ensure cultural as well as legal sensitivities are reflected, says Donaldson.
Spreading into broader business advice presents a commercial opportunity for law firms. But such blurring of the lines also creates openings for consultancies to accelerate their push into the legal market.
The Big Four consultancies — Deloitte, EY, KPMG and PwC — have built sizeable legal practices and sense a chance to boost revenues by rapidly expanding the number of lawyers they employ. KPMG announced in May that it plans to more than double the number of lawyers in its UK firm to about 400 within three years. It has about 3,000 lawyers globally — only 1.3 per cent of its total workforce but enough to match the biggest standalone law firms.
Helped by their audit, tax and consulting divisions, the Big Four already enjoy established relationships with most of the world’s biggest companies. Now, they are trying to capitalise on demand for advice on corporate transactions, regulatory compliance and managed services.
The consultancies are pairing their lawyers with their technology and consultants to deliver a service they say is more efficient for clients, and available at scale, thanks to their size.
Companies “don’t want to pay hourly rates for work which can be done by technology and then reviewed by a lawyer”, says Cornelius Grossmann, global law leader at EY. He cites a data privacy tool developed by EY lawyers and tech teams. The transfer of staff and customer data is more and more fraught with legal risk as regulation increases, so the tool allows banking clients to assess for themselves what to do before moving data between jurisdictions.
PwC has built tools that help create the large numbers of legal documents needed during corporate restructuring. Use of tech can also improve the lot of junior lawyers by “taking some of the more mundane things away”, says Teresa Owusu-Adjei, head of legal at PwC UK. It equipped lawyers with smart tech to help banks and other financial services clients “repaper” thousands of contracts with amendments when regulators ended use of the Libor benchmark interest rate, she says.
As well as using tech to help deliver advice, lawyers sell the technology, too. Deloitte clients can subscribe to its Dupe Killer tool, which uses artificial intelligence image recognition to help businesses identify counterfeit products or copycat designs being sold online.
Legal services need to move towards prevention rather than remediation
The tool, used by clients such as British fashion house Jimmy Choo, is an example of a wider shift in the sector towards identifying legal problems before they arise, says Michael Castle, managing partner of Deloitte Legal in the UK and North-South Europe. “Legal services need to move towards prevention rather than remediation,” he says.
Lawyers traditionally advise when something has gone wrong or on a specific transaction, but Castle sees a chance to help avoid costly legal disputes in the first place.
Some consulting firms’ legal practices are pushing into M&A advice, as well. Yet Castle and Grossman acknowledge the most lucrative legal mandates on big ticket M&A deals remain the preserve of elite law firms. “The transaction [we do] is not the €10bn transaction. It’s a €500mn transaction or €800mn,” says Grossman at EY, which has 4,500 lawyers in 94 countries.
But, while the Big Four legal departments do not win the very biggest mandates on corporate transactions, they believe they can win a steady flow of work from the very largest companies.
Their scale and experience in consulting and tech mean they can create an “industrialised process” to help clients with run-of-the-mill transactions, Castle argues.
Their consultants and auditors have long-term relationships with the largest listed companies, which gives their lawyers unrivalled access to senior executives to pitch legal services.
“This is what the law firms envy,” says Grossman.
Case studies in best practice
Researched, compiled and ranked by RSGI. ‘Winner’ indicates the organisation won an FT Innovative Lawyers 2022 award
Originality: 7 Leadership: 8 Impact: 9 — Total 24
The internet regulation team helps technology, ecommerce and other businesses with internet platforms respond to rapidly changing rules in the UK and Europe.
The team constitutes a collaboration between Deloitte’s legal, risk advisory and consulting practices — a move that allows it to provide connected advice to clients’ legal and risk departments. The approach has won the firm a number of big tech clients around the globe.
Commended: Joanna Conway
Garrigues
O: 6 L: 8 I: 8 — Total 22
The launch of Garrigues Sustainable in 2021 offers clients business law advice, and technical and environmental analysis, spanning 12 service lines relating to environmental, social and governance (ESG) challenges. Legal and non-legal services make up a holistic package delivered by the firm’s lawyers alongside economists, engineers, chemists and biologists from its consulting arm, G-advisory.
LCA Studio Legale
O: 8 L: 8 I: 6 — Total 22
In a joint venture with Mondora, a certified software and advisory company, the firm created Design Rights to deliver legal design services, workshops and consulting. This approach endeavours to improve legal systems and services by focusing on the needs of the users to solve legal problems. The involvement of all the firm’s staff in the project has also led to a review of the firm’s own legal templates. In addition, the team delivers one pro bono project each year.
Pinsent Masons
O: 7 L: 8 I: 7 — Total 22
The firm formalised its working relationship with Brook Graham, its equality, diversity and inclusion consultancy, by launching an equality law practice. This collaboration offers clients a blend of consulting, legal and implementation advice. The team and in-house technicians developed a workforce demographic forecasting tool to help clients identify pay gap problems.
PwC
O: 6 L: 6 I: 9 — Total 21
PwC’s NewLaw offering continues to grow in the UK and rest of Europe. It offers a range of operational and technological consulting advice to legal departments and a managed legal service to handle high volume work efficiently.
Simmons & Simmons
O: 8 L: 8 I: 5 — Total 21
The firm partnered with barrister Jacob Turner and artificial intelligence consultancy Best Practice AI to deliver “explainability statements” — documents that explain why clients are using AI, how it was designed and how it works for users.
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