In a potentially game-changing move for the legal market PwC has today (31 January) received approval from the Solicitors Regulation Authority to become an Alternative Business Structure, meaning that it can directly own limited liability partnership, PwC Legal, bringing together its circa 2,000 global lawyer network.
The only one of the Big Four accountants to maintain a serious legal offering since the withdrawal of the likes of KPMG shortly after the turn of the century, PwC said last year that it was looking at a number of different options in the legal sector including conversion to an ABS, which will allow it to offer a more joined up service with its, until now, entirely separate legal arm.
It was in 2003 that KPMG famously withdrew from the legal sector when it split from its 3,000-lawyer KLegal network in light of heightened regulation, including the Sarbanes-Oxley Act 2002 in the US.
However, as reported by Legal Business last year, KPMG and EY have also been considering a reversal of that position and today Legal Business reports that KPMG has grown its legal services function with the hire of DLA Piper corporate partner Nick Roome, with further hires planned in Manchester. Deloitte is the only one of the Big Four to have said it has no plans to become an ABS.
While some City partners question what benefit accountants would derive from setting up as an ABS, one obvious rationale is that they could rely on legal privilege. The move will undoubtedly place them further in competition with leading City firms, although partners also claim that the large accountants have already entered that space as a result of recently bulking up their legal capability with a series of senior hires, albeit to less fanfare.
Shirley Brookes, senior partner at PwC Legal, said today: ‘This marks an important step for PwC Legal, supports our ambitions to further invest in people and skills, and underpins the focus of both firms on delivering value and quality to clients through strong relationships.’
Crispin Passmore, SRA executive director of policy, added: ‘The authorisation of PwC Legal as an ABS is another example of the innovative changes taking place in the legal market. Nearly two years on from the first ABS licensed by the SRA, we are seeing further increased diversity in the supply of legal services, and that provides consumers with greater choice.
‘Throughout 2014, we expect to see further change as more businesses take advantage of the liberalisation to innovate and grow the legal market, be it through increased exports of corporate legal services, improving access and affordability for small business, or helping individual consumers solve the problems of day-to-day life.’