KPMG’s global head of legal Jürg Birri (pictured) does not know how much it will cost to reach its target of doubling its legal services arm to 3,000 lawyers in the next three years.
He floats $50m and $100m, but for him it is beside the point. It is the appetite he is seeing from KPMG’s member firms – spread across 154 countries and territories – wanting to invest in setting up a legal services arm.
‘I see an opportunity where the legal practices of the Big Four have been able to differentiate themselves, as opposed to the more traditional type of law firm. We don’t see ourselves as being much better in terms of technical advice, but we are seen as a different provider in that we have a number of pillars on which to build.’
It sounds ambitious but this is a Big Four firm that globally pulled in $26.4bn for the year to 30 September 2017. That was up 5%, while legal services – now its own service line within KPMG with 75 legal practices around the world – grew 7%.
It refused to break out legal revenue specifically, but said legal services ‘contributes significantly’ to KPMG’s global tax revenue of $5.83bn.
Birri said legal’s main source of revenue is commercial M&A and due diligence work: nearly half its offering. It also works in employment, immigration, financial services, and compliance and entity management. Germany is its largest practice, with further depth across Europe and Asia-Pacific.
In the six months to December last year, it brought in eight partners to lift total numbers to about 200, and is on the hunt for more. Since October 2016, it grew from 69 global legal practices to 75, with about 1,600 lawyers overall.
‘It’s definitely a substantial operation,’ Birri said. ‘But I don’t call it a law firm because it is not a law firm.’
What he does call it is a one-stop shop.
Birri points to KPMG’s global footprint, a $1bn investment in a technology, innovation and new services programme, and the existing client base as strengths. These advantages also give KPMG an upper hand in acquiring talent, Birri reckons.
But the leader of one top 20 LB100 firm is typically unconvinced: ‘If you say to a lawyer, “do you want to go and work for an accountant?” it’s not the most attractive offer on the table.’
Birri talks of KPMG’s legal services having a partner-to-employee ratio of about 1:8 or 1:10, depending on the country. Adding 1,400 lawyers in the next three years therefore translates to hiring 140 to 175 partners over the same time. One member firm put aside about $2m to set up a legal team of about 15 people recently. Birri said: ‘To be able to hire the right people, that’s absolutely key to us.’
KPMG will not name recent partner hires – coyness typically associated with fears over quality – but says they have come in Australia, Germany, Spain, Switzerland and the UK.
‘They’re hiring good practitioners but I certainly wouldn’t say any of them are rock stars,’ the top 20 law firm leader says. ‘If they get critical mass then maybe they will be attractive.’
Richard Susskind, the author of Tomorrow’s Lawyer, thinks the Big Four – of which Deloitte is a longstanding client of his – will have an enormous impact in the legal market over the next five to ten years – although unlikely at the highest end.
‘They are massive, ambitious, impressive, professional providers who know how to penetrate new markets, they know how to train people, they know how to deploy technology, they’ve all recognised that the legal marketplace is vast and that there is an appetite among clients for providers who work differently.’
The law firm leader agrees they will be a threat but how they take market share is up for debate. The US regulatory environment also shuts the Big Four out of mainstream services in the world’s largest legal market, a huge disadvantage.
‘We don’t take them lightly,’ the law firm leader added. ‘They are getting more concentrated on what they’re going to do.’