Big Four Fear is Unfounded

Fearmongering and fretting about impacts of the Big Four on the legal services sector are the equivalent of tilting at windmills and just as pointless.

I’m tired of overheated headlines and breathless reporting. No, I’m not talking about the trials and tribulations of tariffs and trade. I’m talking about the handwringing and blathering around KPMG’s successful application to practice law in Arizona.

For the love of all that’s holy, handwringers and blatherskites – knock it off.

Scaremongering and Stress

Many lawyers are triggered by fear. Anyone who deals with lawyers in any way, shape, or form knows that the best way to get a lawyer’s attention is to scare them.

The damage inherent with scaring people is that many take threats personally as well as professionally. Lawyers are famous for overworking their worry muscles, which is why scare tactics ranging from screaming headlines to curt communications and bully behaviours cut more deeply than perpetrators might think.

Lawyers and those who work alongside them often need to be constantly vigilant and prepared to deflect the slings and arrows that seem to be endemic to the legal industry. Doing so is a lot of work. And that’s on top of the lots of work we’re already doing.

We weathered the pandemic years with varying degrees of success. Since then and continuing now, regulatory changes are resulting in practices pivoting to survive. In addition, the adoption of artificial intelligence (AI) is either a threat or saviour depending on your practice, business, and point of view.

There has been and continues to be enough stress without manufacturing more.

Here’s one less stress: Fearmongering about the Big Four is unfounded. Fretting about impacts of the Big Four on the legal sector is a waste of time for the majority of service providers who won’t be affected. In all respects, mentally, physically, emotionally, spiritually—and financially—stressing over Big Four legal is the equivalent of tilting at windmills and just as pointless.

Inside Donahue

I speak from experience having spent three years as sole markets advisor to Donahue LLP that operated within EY from 1997 to 2003 as Canada’s first, and so far, only Big Four multidisciplinary (MDP) business legal practice with a U.S alliance. (This role was concurrent with my national markets advisory role at EY.)

Landing into Donahue in 1998 was like parachuting onto the Titanic with the iceberg in sight and the same fate awaiting. Even so, it was a privileged and unique experience ranging from rough and tumble at times to more fun than you can possibly imagine.

(Little did I know then that my Donahue experience would become the genesis of my legal consulting and advisory practice that to this day often carries the same hallmarks: challenging to the point of rough and tumble sometimes, and always more fun than you can possibly imagine – qualities I love and wouldn’t have any other way.)

At its height, Donahue was a business law firm with 130 lawyers located in Toronto, Montréal and Calgary with many considered big-name talent. It offered a wide range of legal services that included corporate/commercial, financial services, mergers and acquisitions, employment and labour, wills and estates, health and workplace safety, energy, real estate, environmental, intellectual property, and business immigration.

Marque legal talent, colourful characters, and daring-do abounded within this entrepreneurial venture that defied standards of law firm convention. Its market position within the professional services field and world of business was “one stop shop,” which the lawyers didn’t particularly like but the market and EY loved. Regulators were four-square against it and Donahue itself.

Donahue’s Demise

While fending off regulatory naysayers was an almost daily occurrence, continual change of the Canadian firm’s moniker was literally the name of the game as it morphed from Donahue & Partners to Donahue Ernst & Young LLP and finally, Donahue LLP all in the span of six years.

In addition to numerous challenges, its attempt to be “full service” – a throwaway phrase that means nothing to no one – resulted in Donahue’s reach exceeding its grasp and its broad range of offerings would become one of its points of failure.

By 2000, cracks were widening into canyons, and departures of individuals and teams were commonplace. For example, the wills and estates team migrated to McMillan LLP while the intellectual property group refugeed to Torys LLP. The rest splintered off to various Canadian firms. The business immigration team remained and operated as Egan LLP. Couzin Taylor LLP, which was not officially part of Donahue but was affiliated with EY handling tax law also stayed put.

Donahue wound up Canadian operations in 2003. Still, its creation bolstered by EY along with brand traits of sheer audacity and top talent plus alignment as well as non-alignment to EY’s core business provided a learning experience for today’s Big Four each of whom offer legal services in their own way and manner, including U.S.-based Donahue & Partners LLP that operates as an independent law firm allied with EY Tax.

So, it stands to reason given this history and all that has transpired within the Big Four legal services realm in the last almost 30 years that KPMG is simply the most recent Big Four member to enter the U.S. market via licensing in Arizona.

Crisis? What Crisis?

Due to their depth and breadth, it’s likely that only global law firms might be affected to any degree by Big Four legal and even then, it would manifest well into the future. Furthermore, regardless of presumed and assumed contenders, competing again the Big Four would pretty much be game over before it started.

That’s because each of the Big Four has four major advantages: 1) Size, scale, and global reach; 2) Every technology and tool in the shed, and the know-how to use them; 3) Deep corporate infrastructure, endless money, and financial acumen; and 4) Long-standing relationships with legacy client CFOs who often call the biggest shots and to whom GCs often report.

At this point, law firms determined to consider themselves Big Four competitors are best advised to: 1) Approach target markets with ONLY their most distinctive, strongest, and consistently profitable legal services that feature multidisciplinary A-teams, and brand themselves accordingly; 2) Embrace and invest in cutting edge technologies and train up talent fast; 3) Build and consistently invest in business reinforcing infrastructure and professional management; and 4) Cross-service and nurture all legal and non-legal relationships within every corporate client enterprise they want to keep and value most.

Yes, that’s a tall order. It’s also wise counsel regardless of your market and competition.

Taking Care of Business

On January 28, 2025, the Arizona Supreme Court pumped the brakes on licensing KPMG’s application to practice law in that state while the Court sought answers to questions. Mercifully, the cooling-off period caused frothy reporting and mouth-foaming to cease on the subject. Even with approval granted a month later on February, 27, 2025, there remains precious little to froth or foam about.

KPMG is now licensed to operate as an alternative business structure (ABS) in Arizona. Even so, it’s likely that KPMG Law will start in the U.S. market as—and perhaps remain—primarily a tax law firm with the possibility of a few ancillary practices that align with KPMG’s core business, and initially service KPMG’s non-audit clients. It would also provide legal managed services, which entails handling rote but predictable grunt work.

Routine work is still foundational to many law firms that due to high rates usually need to drop this work to the firm’s lowest production level or provide deep discounts, which results in rote work being a financial loss-leader. Ironically, these are often the same firms that – wanting all things all ways and always; the equivalent of having their bread buttered on both sides – also desire the most complex work.

And therein lies both vulnerability as well as opportunity.

Perhaps a time will come when everything-to-everybody law firms will either be smart enough or market-forced to make hard choices and stake out a distinctive one of one market position, determine bright-lined business objectives, measurable strategies, and accountable tactics in order to work collaboratively and conduct commerce like other businesses that operate in the real world.

Keep Calm and Carry On

Speaking of the real world, ventures by KPMG into major corporate transactional work and bet-the-company litigation will be future-state at best, if at all.

This is because KPMG knows who it is. Add to that, the Big Four’s adoption long ago of multidisciplinary practice that enables non-territorial and reciprocal working relationships alongside a variety of law firms of different sizes and strengths in various jurisdictions.

Within the Big Four as a set as well as the broader professional services realm, KPMG knows which side of its bread is buttered. Its market proposition is clear; KPMG’s recently retired global head of legal services outlined it. Given my lived Big Four legal expertise and experience, I understand this position and believe him. You should, too.

Still, I must tip my hat to KPMG in recognition of taking this step and will continue to observe quietly and comment calmly on the Big Four’s progress of offering legal as a service line.

In the meantime, a little distance might help put things into perspective. A UK-based colleague charmingly described the Big Four’s forays into legal work in his neck of the woods as “a bit of a damp squib, not all that disruptive to law firms” and referring to KPMG-Arizona commented that “maybe this time it’ll be different?”

I doubt it. If this time it’s either disruptive or different, I’ll eat my bonnet – unbuttered.

This article appeared on Slaw, February 2025.