Some will claim “ they have never been away from the legal market”. Yes, but it is fair to say that their presence has been modest since Arthur Andersen and its legal arm “Andersen Legal”, counting more than 3.000 laywers across the globe, disappeared in 2002 following the Enron collapse. Their modesty in the last decade was no doubt based on very good reasons. Not only were the regulators much more critical of activities outside the normal scope of the auditors at the Big 4, but – more importantly – the entire “business community” felt it was “not done” to combine and source consulting and legal work from your auditors. Now more than 10 years later and a major Euro and financial crisis further, more maturity has been reached in the debate on the whole issue.
Personally, I think that the “attest” function (this is the truly independent opinion on the quality of goods and services) in our world is being substantially revalued. Independent professionals of top quality (and well remunerated) who attest that our food is healthy, that our clothes are manufactured in an ethical way, that our nuclear power plants are safe, that governments are accurate in their budget assumptions and finances, that our financial information about our companies are reliable…. will increase their impact and value to our environment. It is leading to a major revaluation of the attest function. People are willing to pay for it what it really costs to be quality-wise at the desired level. It makes the attest and audit function a real high level and honorable function. It will attract top professionals and smart people who care about our community and its good functioning. The other side of this medallion is the need for more and more real independence. This, in a modernized fashion, will allow auditors to work with tax advisors, consultants and lawyers,… but only in such a way that makes it very clear that the auditors are and will remain independent. The Big 4 are no doubt sweating in their own board rooms to figure out how they are going to realize this and safeguard their future. In my view that will only feed the process started in 2002 to make the services of the Big 4 stronger and stronger in their own right. A model where the referrals from the auditors are not the driving force, but where they build a home for many talented professionals who can work together when it makes sense and is perceived as being OK. It also means that the already strong tax arm of the Big 4 will look how they can further strengthen themselves in their own right, have more CEO access and strategic entry into clients. It does not take long to be convinced that having top lawyers amongst you can dramatically help in this context.
There is of course also another very good reason. Some clients prefer to have all services related to a transaction handled by one single provider of services. When they purchase an important asset, they are interested in knowing the asset is in good shape and physical condition, that the asset is the best choice for what they need, that it is structured from a tax perspective in the most effective way and that the contracts are safe. Client may decide to manage the process with different suppliers of services, all best in class or may chose to have one single party accountable and responsible for all these various dimensions. The latter is often the business case by the Big 4. Clients are and will remain open to both options. The market will therefore continue to push for legal services to be provided by the Big 4.