The large accounting firms are upping their presence in Asia’ legal market, and law firms must be proactive to stay ahead of the pack, a panel comprising several senior law firm partners said at the Inter-Pacific Bar Association’s annual conference in Hong Kong.
The panellists included Elaine Lo, Asia chair at Mayer Brown JSM, Jonathan Watmough, managing partner of RPC, Patrick Sherrington, Hogan Lovells’ Asia and Middle East regional managing partner, Simon Powell, managing partner of Latham & Watkins’ Hong Kong office, and Jeremy Lam, co-head of Deacons’ financial services practice.
The panellists noted that the major accounting firms are making a resurgence in Asia’s legal market. PwC, for example, bolstered its legal offering in Asia with a tie-up with Singapore law firm Camford Law in July 2014. Meanwhile, Ernst & Young established legal arms in Shanghai, Vietnam and Singapore last year. And in April this year, the firm expanded its network to include 55-lawyer South Korean firm Apex Legal.
In terms of the potential threats and game changers that are out there, it is very much the accountancy firms, said Lam. “They have the resources, global reach, and a strong brand and reputation, and we have to be mindful of that.”
In the last decade, in-house legal departments have raised their expectations from law firms in terms of costs-effectiveness, efficiency and predictability, panellists said. This has spurred law firms to run better practices, and to be proactive in terms of seeking out cost-saving processes and services for their clients.
“Law firms face a competitive threat from other law firms that are being proactive and innovative. On top of that, you have the accounting firms that recognise that the legal market is liberalising and that they can have a second bite of the cherry,” said Sherrington.
“It is all symptomatic of the competitive market in which we are in, and law firms have to respond to that market pressure, otherwise others will.”
While the accounting firms’ growing clout in Asia’s legal market cannot be ignored, they are also set to face a number of challenges of their own. Firstly, the large quantity of auditing work handled by accounting firms raises concerns over potential conflicts of interest.
Furthermore, the U.S. Sarbanes-Oxley Act limits the scope of legal services accounting firms can offer in the country, which could in turn hamper the firms’ offering on a global platform.
Accounting firms are currently perceived as massive organisations, and they try hard to standardise the processes that they run for their clients in order to increase efficiency and reduce costs, said Lo. “Clients sometimes get the impression that what they are getting might not be a bespoke product, but more of a commoditised process. Law firms have the advantage in that clients still see their service as more customised and bespoke,” said Lo.
The IPBA’s 25th Annual Meeting and Conference, held in Hong Kong, ran from May 6 to May 9.