When a senior Big Four partner reached out to the company, he realised that two large law firms had pitched for the project and were offering the same services, albeit at a much higher fee.
As top law firms and the Big Four look for new avenues of growth, they are increasingly crossing paths on turfs such as M&As, policy advisory, insolvencies, creation of family trusts and corporate investigation mandates.
“The overlap between accountancy firms and law firms when it comes to advice on M&A transactions is only on structuring. Within structuring, while the accountancy firms are very strong on tax, some law firms… bring those tax structuring skills too,” said Sujjain Talwar, co-founder and partner at ELP. “Likewise, legal diligence is always the law firms’ domain as only lawyers are licensed to carry out this work and clients benefit from the attorney-client privilege.”
Earlier, the areas where a law firm and a professional services firm would operate were fixed.
Typically, a law firm would rope in a professional services firm for tax structuring.
“We realised that tax structuring is not rocket science and we ourselves can do that, especially where margins are high,” said a senior partner in a large law firm.
“There is a great deal of convergence in the offering of all professional services firms, including tech firms, other than in regulated areas of practice, which remain exclusive domains. Accounting, consulting, legal, and technology are all competing at one level and collaborating like never before,” said Vishesh C Chandiok, CEO, Grant Thornton Bharat, India’s fifth largest professional services firm.
Professional services firms operate on low margins but high volumes of work. The law firms, on the other hand, operate on higher margins, but it’s getting very competitive among the top set; hence each one is trying to get a foothold in newer areas.
“As top-tier firms jostle for more work, they are bound to run into new competitors,” said Padmini Rathore, CEO, DSK Legal. “Each of the big firms is adding depth and width to their service bouquet. We, as a firm, strongly believe this trend is here to stay and have been fortunate to organically as well as horizontally grow the expertise, width and strength of our offering as is evident from our recent induction of experienced and reputed partners in our partnership along with their teams on a pan India basis.”
Law firms and the Big Four have also started poaching from each other, not just at junior level but even at partner level.
In India, the top six professional services firms–EY, PwC, Deloitte, KPMG, Grant Thornton, and BDO–dominate in terms of revenue and the number of partners. Recently, Ritesh Kanodia joined ELP as a partner from Dhruva Advisors LLP. Earlier, Hiten Kotak, leader of M&A tax at PWC, joined law firm Khaitan & Co as executive director.
Law firms and professional services firms work with each other, but also directly compete, according to insiders.
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