TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, September 25, 2017

PwC Launches U.S. Law Firm, Seeks Market Share From BigLaw, Especially In Tax

PWCNew York Times DealBook:  PwC, the Accounting Giant, Will Open a Law Firm in the U.S., by Elizabeth Olson:

Law firms already elbowing one another for multinational clients will soon have a new competitor: The Big Four accounting firm PwC, formerly known as PricewaterhouseCoopers, plans to open a law firm in Washington, D.C., next week.

The law firm, ILC Legal, will advise clients on international matters such as corporate restructuring. Its lawyers will act as special legal consultants, rather than fully licensed United States lawyers, allowing them to provide counsel on foreign law but not United States law.

ILC Legal, nonetheless, aims to vie with big law firms as a one-stop shop offering multinational companies access to other PwC services, including tax consulting and its network of 3,200 lawyers spread across 90 countries. The firms in that network operate separately but follow the same standards and practices under the PwC brand name. ...

ILC Legal hopes to attract multinational companies seeking counsel in areas like digital security and data protection, dispute resolution, international corporate structuring, and mergers and acquisitions, Mr. Edmundson said. It will operate like a traditional law firm, soliciting clients and billing them directly for services. ...

Traditional law firms can take some solace in the restrictions that ILC Legal must follow in the United States. Current law generally does not allow accounting firms to provide nonauditing services, including legal services, to companies they audit. That means ILC Legal can provide services only to companies that are not PwC auditing clients.

PwC’s decision to open a law firm in the United States, which was first disclosed this week in The American Lawyer, faced another restriction: Most American jurisdictions prohibit nonlawyers from owning or operating law firms or sharing fees with nonlawyers. Washington, however, does not ban firms owned by nonlawyers.

Elephants-in-the-Room-CoverALM Intelligence, Elephants in the Room: The Big Four’s Expansion in the Legal Services Market:

The Big Four’s recent expansion into the legal market is not the accounting industry’s first foray into providing legal services. Throughout the 1990s, the big accounting firms expanded aggressively from their traditional audit business. After a decade of investment and expansion, the Big Five, as they were then known, built legal arms which rivalled the scale of the biggest law firms. Despite their early success, their ambitions in the legal industry were thwarted by a series of scandals and ensuing regulation, which exposed the potential conflicts of interest stemming from mixing audit with legal advisory services. ...

Today the legal arms of the Big Four are by any account, sizeable. In 2016, the legal arms of the Big Four averaged 2,200 lawyers working in 72 countries. It is important to note that these numbers represent only the legal arms of these businesses — not the total number of lawyers working within the overall organization. Cornelius Grossmann, the Global Leader for EY Law, when reporting that his firm’s legal arm had 2,100 lawyers operating in 80 countries, was quick to note “these figures do not include people with a law degree who are accountants or tax consultants, these are lawyers fully dedicated to EY’s legal business excluding tax and immigration.” ...

ALM

[T]he Big Four’s strongest practices include tax, labor and employment, and immigration. Their strength in tax-related legal services is a natural offshoot of their leading audit and tax advisory business units. In tax, they offer a wide range of legal services related to entity management, international business reorganizations, investigations, transfer pricing, and issues related to VAT. While the Big Four have tended to stay away from litigation-related services to avoid conflicts with potential clients, most offer legal services related to tax litigation. Tax litigation, unlike corporate litigation, tends to involve representing clients in law suits against governmental bodies, creating few conflicts with potential clients.

ALM6

... The legal industry has seen a deluge of new entrants over the past half-decade due to the rise of alternative legal service providers. There is a temptation to see the Big Four as part of this trend - just “another new competitor” in the already crowded legal market. This is a mistake — the Big Four come to the legal market with a unique combination of strengths. Their size, global presence, and existing relationships with corporate clients make them a formidable competitor. Their well known strength in project management and process improvement is envied by many law firms. Most importantly, they have a history of successfully expanding into new markets and consolidating market share.

http://taxprof.typepad.com/taxprof_blog/2017/09/pwc-launches-us-law-firm-seeks-market-share-from-biglaw-especially-in-tax.html

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Comments

Just another example of the business of law consuming the profession of law and creating an industry wherein lawyers are just the most expensive out of a range of service providers. And IIRC, the starting salary for JDs hired into the Big 4 is around $70,000 per year - a very far cry from Biglaw, and not all that much more than what the average undergrad's starting salary is these days (all majors).

Posted by: Unemployed Northeastern | Sep 25, 2017 4:28:49 PM

That name is a sure winner! /sarc

Posted by: Anon | Sep 27, 2017 5:11:37 AM