Law firms too slow in diversifying

A recent analysis shows growth of the Big 4 accounting firms is outstripping that of their legal counterparts, the Big 6 in Australia. And as the chart of the changes in revenue of Big 4 and Big 6 shows the ‘accountants’ are enjoying the fruits of steadily diversifying their range of services, client industries and geographic footprints in a way that delivers them good upside and largely shields them from the vicissitudes of the economic cycle.

This divergence in business strategy is surprising, more especially as the needs of clients are multi-faceted, often complex and extend well beyond law firms’ traditional services. Indeed they serve the same corporate and government clients as the accountants and have just as much access to c-suites and boards, yet they are allowing others to eat their breakfast, lunch and dinner so to speak. What’s even more surprising is that examples of successful law firm diversification – judged in terms of growth, profitability and how complementary the services are – have existed for a decade or more, albeit in relatively small numbers and scale. Examples in Australia, the USA and the UK include non-lawyer services in governance, risk, compliance, policy, regulatory affairs, procurement and commercialisation.

So why aren’t law firms diversifying at the speed and to the extent their accounting cousins have pursued so successfully? What is it that causes them seemingly to shy away from adding new services delivered by professionals other than solicitors?

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