A sign that in-house legal support is becoming big business

By Yves Faguy Web Only

A sign that in-house legal support is becoming big business

 

Catrin Griffiths reports that mid-tier firms are right to worry about PwC’s recent decision to snap up half of GE’s tax department – along with 600 of its lawyers – as part of a five-year deal to provide tax services to the multinational conglomerate, starting April 1:

So here’s the initial question for PwC: how long can you get away with providing business services to a market you are also competing with? Isn’t this doomed?

The answer is no, it’s not in the slightest bit doomed. PwC has been consistently smart about what it wants long-term, and right now what it’s doing is disrupting its own business. However strong its law firm consultancy service is, it pales into insignificance against the growth potential of its legal arm, which grossed £60m in the UK last year alone with a 24 per cent increase in billings. Yes, PwC may have lost audit clients among the top 100 – Burges Salmon and Ince & Co being two examples – but at the same time, it has won Clifford Chance and Herbert Smith Freehills. Neither CC nor HSF is likely to have sleepless nights over PwC as a competitor; they’re too busy worrying about the US firms.

Part of the worry for law firms, understandably, resides in what one industry watcher called a “rapid blurring of the boundaries between what used to be thought of as separate and distinct professional services.”

Fair enough. But another takeaway is that that PWC’s efforts are really a confirmation that clients see value in the delivery of in-house legal services.

Interestingly, news hit yesterday that global law firm Pinsent Masons bought a 20 per cent minority stake in Leeds-based legal startup, Yuzu, which brands itself “as a solution for GCs, designed and delivered by GCs.” In a statement announcing the deal Pinsent Masons explained that the plan is to incubate the start-up during its start-up phase by providing it seed funding and strategic support.

It’s noteworthy that large professional services firms are making these moves, but the service they are offering is hardly new. These deals are reminiscent of new law pioneer Lawyers on Demand, which has offered services for in-house teams for a decade, Deloitte’s acquisition of Conduit Law last year, and Axiom’s move into Canada when it purchased Cognition LLP ‘s GC practice  (now Caravel Law), which has also been around for over 10 years.  Also offering in-house legal support in Canada are Calgary-based Simplex Legal (also with offices in Montreal and Toronto) and Delegatus in Montreal.

Over the last 20 years we’ve seen in-house departments around the world grow and take work away from law firms. Now with legal operations professionals taking residence in legal departments looking to re-engineer their functions, the question is whether they may be looking to offload some of that work and outsource it once again. If so, there's a lot of opportunity there.

 

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