Page 9 - Lawyers and Accountants - The Future of the Professions
P. 9
Lawyers and Accountants 2019 -
expansion but Enron and Sarbanes Oxley.21 While not exactly sub rasa, the expansion continued in countries
which did not have the same ethical restrictions as the United States.
This left Biglaw to continue their own global expansion. This effort did not last long. Reality struck Biglaw
when their international expansion hit a wall during the worldwide recession in 2008. Managing dozens of
their own offices was no longer financially practical in a recession,
and so they consolidated offices in key commercial centers. If a
branch was outside of a commercial center, they kept it only if
another Biglaw firms did not have an office in that location.27 Other
also restructured the firms into vereins, a network or type of club or
association under Swiss law; this allowed them to reduce financial
risk, because each member firm remained independent. The result
is today Biglaw is competitively squeezed between vereins and the
Big Four.
What was the actual reality in the late 1990s? The legal media was
abuzz with the dire implications (much as the media are today).
Global practice charts illustrated issues and compared income
among firms to show different aspects of the market. They focused
on the micro aspect rather than the macro economics. The fact is
the relative market share for the Big Five firms never exceeded 0.4%
of the total legal market which remains the same today.
The contrast between size and markets (or countries) is illustrated
by the opposite two charts. While the size of individual law firms is similar to the Big Four, the Big Four legal
practices are, on average, located in more than twice the number of countries.
Financially, each of the largest firms or vereins has
revenues exceeding the combined total of $2 billion of
legal services provided by the Big Four.30 The risk to
Biglaw is illustrated by the sheer size of the Big Four’s
legal coverage. Biglaw is confined to the same exact 30
locations (Paris, London, Frankfurt, Beijing, Rio de
Janeiro, etc.) in which the Big Four have their largest
office.
The risk for Biglaw is that their market footprint is smaller
than vereins and the Big Four, as illustrated by the charts
below. As financially-interconnected firms, their growth
continues to be limited. Additionally, they are not able to
combine resources with accounting networks and associations as a result of their structures.
21 Big Four Accounting Firms, WIKIPEDIA, https://en.wikipedia.org/wiki/Big_Four_accounting_firms; Enron, WIKIPEDIA,
https://en.wikipedia.org/wiki/Enron.
27 Supra note 11.
30 David Wilkins & Maria Jose Esteban, The Reemergence of the Big Four in Law, HARVARD CENTER ON THE LEGAL PROFESSION (Jan. 2016) (global legal
market is $700 billion), https://thepractice.law.harvard.edu/issue/volume-2-issue-2/.
6
expansion but Enron and Sarbanes Oxley.21 While not exactly sub rasa, the expansion continued in countries
which did not have the same ethical restrictions as the United States.
This left Biglaw to continue their own global expansion. This effort did not last long. Reality struck Biglaw
when their international expansion hit a wall during the worldwide recession in 2008. Managing dozens of
their own offices was no longer financially practical in a recession,
and so they consolidated offices in key commercial centers. If a
branch was outside of a commercial center, they kept it only if
another Biglaw firms did not have an office in that location.27 Other
also restructured the firms into vereins, a network or type of club or
association under Swiss law; this allowed them to reduce financial
risk, because each member firm remained independent. The result
is today Biglaw is competitively squeezed between vereins and the
Big Four.
What was the actual reality in the late 1990s? The legal media was
abuzz with the dire implications (much as the media are today).
Global practice charts illustrated issues and compared income
among firms to show different aspects of the market. They focused
on the micro aspect rather than the macro economics. The fact is
the relative market share for the Big Five firms never exceeded 0.4%
of the total legal market which remains the same today.
The contrast between size and markets (or countries) is illustrated
by the opposite two charts. While the size of individual law firms is similar to the Big Four, the Big Four legal
practices are, on average, located in more than twice the number of countries.
Financially, each of the largest firms or vereins has
revenues exceeding the combined total of $2 billion of
legal services provided by the Big Four.30 The risk to
Biglaw is illustrated by the sheer size of the Big Four’s
legal coverage. Biglaw is confined to the same exact 30
locations (Paris, London, Frankfurt, Beijing, Rio de
Janeiro, etc.) in which the Big Four have their largest
office.
The risk for Biglaw is that their market footprint is smaller
than vereins and the Big Four, as illustrated by the charts
below. As financially-interconnected firms, their growth
continues to be limited. Additionally, they are not able to
combine resources with accounting networks and associations as a result of their structures.
21 Big Four Accounting Firms, WIKIPEDIA, https://en.wikipedia.org/wiki/Big_Four_accounting_firms; Enron, WIKIPEDIA,
https://en.wikipedia.org/wiki/Enron.
27 Supra note 11.
30 David Wilkins & Maria Jose Esteban, The Reemergence of the Big Four in Law, HARVARD CENTER ON THE LEGAL PROFESSION (Jan. 2016) (global legal
market is $700 billion), https://thepractice.law.harvard.edu/issue/volume-2-issue-2/.
6
