Legal Market Competition — Do the Math
Today’s Big Four – Deloitte, PwC, EY and KPMG – are the largest global professional services firms offering audit, assurance, tax, consulting, advisory, actuarial, corporate finance, and legal services.
Outward appearances indicate no discernable differences among them. However, compared to other professional services firms, the difference in being a Big Four firm is that you either are one or you’re not.
Once upon a time, the Big Four were more. Mergers and a major scandal shrunk what were once the Big Eight to four.
Their recent and simplified history goes like this:
The eight were Arthur Andersen, Arthur Young & Co., Coopers & Lybrand, Ernst & Whinney, Deloitte Haskins & Sells, Peat Marwick Mitchell, Price Waterhouse, and Touche Ross.
Mergers with smaller firms enabled expansion. One of the largest was in 1987, when Peat Marwick joined Klynveld Main Goerdeler and after some name-shortening became KPMG.
The eight became six in 1989 when Ernst & Whinney merged with Arthur Young to form Ernst & Young, now called EY and Deloitte, Haskins & Sells merged with Touche Ross to form Deloitte & Touche, which now goes by Deloitte.
Six became five when Price Waterhouse merged with Coopers & Lybrand in 1998 to become PricewaterhouseCoopers – known at that time as the biggest name in the business, literally – now know as PwC.
And, five became four in 2002 when Arthur Andersen collapsed under the weight of the Enron scandal and practices were sold to the remaining Big Four firms.
All this in 15 short years.
Many in the legal profession point to the Big Four accounting firms as having the recipe for success. Applied to recent happenings in the Canadian legal market, how might this recipe work out?
Since 2011, Canada’s Ogilvy Renault LLP and Macleod Dixon LLP morphed into Norton Rose Fulbright, Fraser Milner Casgrain LLP blended into Dentons, Heenan Blaikie LLP dissolved in 2014 and next month, Davis LLP will merge with DLA Piper.
All this in four even shorter years.
With Baker & McKenzie having had a Toronto presence since the 1960s, there are now four international legal behemoths operating in major markets across Canada and the rest of the world. Each has a global brand, massive infrastructure, and insatiable appetite for revenue.
For BigLaw and MidLaw, this is resulting in a small world getting even smaller.