Where the big money lies
This week saw the European Court of Justice make its contribution to the debate surrounding multi-disciplinary practices. Words like stable, door, horse and bolted spring to mind.
The days of the global, one-stop shop professional service firm appear to be over.
In the current climate it would take an enormously brave decision by a Big Five firm to announce it is seeking to bring another professional service in-house. That’s brave in the Sir Humphrey sense: with demands for more separation between audit and non-audit services post-Enron, it would be impossible to create a compelling argument why it should happen.
But that doesn’t mean that MDPs won’t happen. Outside of the Big Five there are more compelling reasons. At a local level it might make sense, or for top thirty firms serving larger SMEs.
But what of the lawyers? It is conceivable that they will go courting. According to the Accoutnancy Age Top 50, PricewaterhouseCoopers – by a distance the largest firm – earned £2.1bn in fees in the UK last year, with each of the firm’s 1,000 or so partners bringing in more than £2m a piece.
According to Legal Week’s equivalent table, Clifford Chance, the UK’s largest law firm, earned £937m in fees last year with each equity partner bringing in an average of £721,000.
Accountancy – with its attendant service lines – is simply a more lucrative business than law. And is, you might argue, run more efficiently.
Legal firms are experiencing the sort of rapacious growth rates enjoyed by accountancy a few years ago – Clifford Chance’s fee income leapt 29% last year. But, like accountancy, that will slow and law firms will seek greener pastures. When that happens the Enron furore should have quietened down. Only then may we see interest in MDPs take off among the big boys.