Law firms, emboldened by their increasing scale and reach, are taking on accountants in a battle to convince the best graduates that the law offers the most stimulating careers.
Each year, accountancy and legal firms battle it out to get their pick of the nation’s bright young things.
So far it has been a one-sided contest, and accountants have done very nicely, thank you. However, some lawyers think that, with regulatory pressure set to snip off all the accountancy profession’s interesting bits, leaving practices restricted to audit and tax, tomorrow’s cream of the graduate crop are more likely to look to the legal profession as the most exciting bet for the future.
If this happens, it will mark a radical change. Last year – and as far back as one cares to look – accountancy firms have been right at the top of the league tables when it comes to ‘most desired places to work’. While the top law firm in last year’s Times High Flyers survey was Clifford Chance, at number 26, the big accountancy firms ranked, as they consistently do, at the top of the graduate wish list.
High Flyers lists PwC and Andersen – no longer an option – in second and third places respectively, ahead of the civil service and the army, with KPMG in sixth place, Ernst & Young 13th and Deloitte 16th. Consultancy Accenture topped the table, and companies filled out the top ten. Unilever, Procter & Gamble and Mars were in seventh, eighth and tenth places respectively.
Chris Campbell, managing partner at law firm Dundas & Wilson, argues that there is a simple reason for the relatively poor showing of law firms in league tables such as this at present. It all comes down to scale.
‘Clifford Chance is probably the world’s biggest law firm, yet I would think that, in terms of numbers of employees, it has probably no more than between 2% and 4% of the number of staff of the biggest accountancy firms,‘ he says.
The reason for this difference in scale is that the top law firms have only started to develop an international dimension in the past ten years, whereas accountants have been developing global practices for decades.
However, Campbell believes the tide is turning. ‘The activities of the regulators almost certainly mean that, if we look ahead four years, the largest accountancy practices will have reduced in size, having spun off bits of themselves as separate operations,’ he says. ‘At the same time, the law firms are expanding. More mergers of big accountancy firms are unlikely, but law firms still have some way to go down the merger road.’
In parallel with this, Campbell reckons that the battle for the hearts and minds of the cream of school leavers with a profession in mind is likely to tilt in favour of the lawyers.
‘I would certainly expect audit firms to struggle in future to recruit the best and brightest graduates if they are restricted to offering them audit work. The big firms themselves would admit to being worried that audit won’t be sexy enough on its own,’ he says.
Today, a top accountancy practice can offer its graduates the promise of a number of different careers and the lure of international travel and secondments. This, as Campbell points out, has been much less the case in the legal profession.
Graham Finnie, HR director at Ernst & Young, admits that the shifting regulatory climate will have an effect on how accountancy firms go to market in this area, in terms of making sure that they can continue to present attractive careers. ‘We are still unsure how far the pruning will go,’ he says.
But Finnie argues that, whatever happens, the profession will be able to rest on the fact that auditing presents an interesting and rich career.
Graduates get the opportunity to develop a genuinely global business perspective, developing insight into what shapes businesses across all sectors of the economy. ‘To put it frankly, we have a presentation challenge.
We have to answer the question, why, of all the careers in the world, should one choose to train as a chartered accountant? The answer has to lie in the breadth of this career and the opportunities it provides,’ he says.
However, some heads of audit have told us privately that it will become more difficult to recruit graduates into audit if there isn’t an exit to more interesting work.
Charles Macleod, head of recruitment at PwC, disagrees. ‘The regulatory restrictions impose some challenges around how we engage with our audit clients, but they also create opportunities for us with companies that are not audit clients. It is far too early to see what this will mean in terms of the overall impact of an accountancy career,’ he says.
‘What we do know, though, is that the popularity of accountancy as a career in the US went up after the Enron and WorldCom debacles, not down. We are happy graduates that can list a stay with PwC on their CVs will view this as a kitemark of quality in the distant future.’
- This article first appeared in the November edition of Financial Director magazine.