Law Firm Responses to the Big Four

Volume 7 • Issue 3 • March/April 2021
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Expanding Their Scope

Law firms offering new lines of service

In “The Global 100 Responds to the Big Four,” Robert Couture’s analysis shows Global 100 law firms responding to the Big Four accounting firms’ expansion into the legal services market in roughly one of three ways: (1) with no change to their strategy, (2) by establishing mutually beneficial relationships with the Big Four, or (3) by expanding the service offerings of the law firm to compete with the Big Four’s core value proposition of integrated services. Indeed, this third response represents a strategy that has been building momentum in the last decade, as law firms and other legal service providers have begun hiring new professionals and building new structures within their organizations to offer nonlegal professional services. (For more on the rise of “alternative” legal service providers, or ALSPs, see our July/August 2019 issue.)

Through many of these new entities, firms are shifting toward a more integrated services model that offers a broader suite of client solutions.

The last year has seen a steady trickle of news about Big Four hires and new service offerings in the legal sector geared toward competing with these reemerging players in the legal market. In October 2020, Baker McKenzie hired an economist from PricewaterhouseCoopers (PwC) to bolster its tax practice in Germany with the expressed goal of competing with the Big Four. In February 2021, the legal service and technology company UnitedLex hired a handful of professionals from PwC and Deloitte “in order to serve the needs of legal departments undergoing a digital transformation.” Furthermore, a recent report by Baretz+Brunelle—which drew from online polls, public information, and individual interviews—found that 35 percent of Am Law 100 firms and 57 percent of the Global 100 firms have developed “captive alternative legal service providers” with new products ranging from managed services to consulting practices that complement their firms’ core legal services. In short, through many of these new entities, firms are shifting from a traditional model offering exclusively legal services toward a more integrated services model that offers a broader suite of client solutions.

In this article, we take a closer look at what these new organizational structures within law firms look like and, perhaps most revealing, at the professionals running them. What is it about offering nonlegal services at large law firms that is enticing these professionals away from consulting practices and Big Four firms? How does the law firm experience compare with these professionals’ previous career stops? What forms might these new structures take? We spoke with two such professionals at the front of this trend—Paul Hastings’s BJ D’Avella and Eversheds Sutherland’s Trystan Richards—to learn more.

Finding Big Law

BJ D’Avella is no stranger to law firm life. Having grown up the son of a law firm managing partner, interned in a firm at an earlier age, and seriously considered a legal career himself, D’Avella’s personal and professional development was influenced in big and small ways by the legal profession. But he did not become a lawyer. For the better part of the past two decades, D’Avella has served as a consultant for life sciences companies, including a number of years operating out of the Big Four. And yet, in perhaps a not-so-unexpected twist of fate given the family business, he now finds himself at a law firm leading Paul Hastings’ Life Sciences Consulting Group.

“The opportunity was clear: I’d get to work at what is by any measure an elite law firm…to deliver significantly greater value to our clients,” says BJ D’Avella, group leader of Paul Hastings’ Life Sciences Consulting Group.

D’Avella got his first job out of business school at PwC, where, as he describes, “when I joined, audit was very much the tip of the spear” when it came to their offerings. At the time, however, PwC was in the process of building up an array of advisory services for non-audit clients, including regulatory compliance within life sciences. Enter D’Avella, who would spend the next eight years consulting in this space, learning both externally from his clients about their wants and needs as well as internally from PwC and the organization’s well-established work methodologies and client service models.

From there, D’Avella moved to Huron Consulting Group. “I was at an inflection point in my career,” he says. “I really wanted to get into a smaller context and grow my own network, be able to write my own story.” After six years consulting at Huron, that story would lead back to the Big Four when Deloitte acquired his practice in 2017. Unlike PwC when he was there, D’Avella describes Deloitte’s “tip of the spear” as consulting, providing him yet another model within which he could serve his clients.

In 2019, Gary Giampetruzzi, a litigation partner at Paul Hastings and global chair of its Life Sciences Department, approached D’Avella with the idea of launching a consulting practice within the law firm. “My first question was, ‘What is that going to look like?’” D’Avella recalls. “And they said, ‘Well, we don’t really know—we’re not consultants—so we’re looking for some help on that.’” It was this chance to build a practice from the ground up in a new model with built-in advantages that enticed D’Avella perhaps above all else. He explains:

The opportunity was clear: I’d get to work at what is by any measure an elite law firm, alongside practitioners at the top of their fields, to deliver significantly greater value to our clients in an incrementally more efficient way. On top of that, to be able to come here with mostly a blank slate and a mandate from firm leadership to create a new consulting practice and prove out an innovative business model within the elite law firm context—it was all just way too good of an opportunity to pass up. I left Deloitte on very good terms because everybody understood that this was a unique opportunity. And here I am.

Trystan Richards followed a different path to law firm life than D’Avella except for one important similarity: Richards, like D’Avella, is also not a lawyer. After spending his first six years out of university as an officer in the British Army, Richards turned to banking operations at Morgan Stanley, describing his operational focus as “quite a small cog in the rather large machine.” After roughly four years at the financial services multinational, in 2014 he moved to Deloitte’s Managed Services practice. “Deloitte Managed Services was about addressing knotty problems institutions face as a result of business and regulatory change by providing the right people, process, and technology as a packaged service to take the problem away from our client’s inbox,” Richards explains. “When I joined that practice, it was with investment banking in mind, but then it evolved into something focused on legal re-papering, which was a challenge that banks were facing given the regulatory roadmap the industry was, and still is, up against.”

“Law firms woke up to the idea that the Big Four were eating their lunch,” says Trystan Richards, head of Legal Projects Operations at Konexo.

During his six years with Deloitte, Richards was a part of the Big Four firm’s widely publicized partnership with Magic Circle law firm Allen & Overy aimed at offering a new service to help banks address new regulation. “And that, I think, was a real precursor to the Big Four and others getting involved in this area and recognizing there was an opportunity here,” he says. “But at the same time, I would say law firms woke up to the idea that the Big Four were eating their lunch—that there was a real opportunity for law firms to improve their offerings in the alternative legal service space to compete with the Big Four.”

This, Richards, explains, is what ultimately motivated him to move over to Eversheds Sutherland’s consulting arm, Konexo, in the spring of 2020. “The problem with Deloitte was that it wasn’t a law firm,” he says. “We were offering legal services under the guise that we would do the operational bit whilst having to rely on our clients to give us the legal opinion.” And clients, he adds, increasingly want an all-encompassing solution. At Konexo, Richards saw a better opportunity for providing that type of service integration.

The law firm consulting arm

Paul Hastings and Eversheds Sutherland are far from the only major law firms establishing their own consulting and other professional service offerings. In recent years firms such as Hogan Lovells, Ropes & Gray, Bryan Cave, and Ashurst have all expanded into various corners of the consulting services spaces. To be sure, there is no singular form these new law firm practices take. Firms undertaking such expansions are at different phases of progress in answering myriad questions over what types of consulting services to offer, who the right professionals are to bring in and involve, and how these new consulting practices will relate to the firms’ legal practices. In Paul Hastings and Eversheds Sutherland, we see two examples of how law firms are grappling with these questions in light of their specific goals and contexts.

“We have this double mandate to both deliver in the marketplace and, secondarily, to prove out the viability of the model,” D’Avella says.

Paul Hastings’ Life Sciences Consulting Group is not yet a year old, having just opened shop with D’Avella’s arrival in June 2020 (during the height of the pandemic, no less). At that point, D’Avella says, he was tasked with building nearly every aspect of the practice from the ground up. “Unlike many traditional lateral hires at Paul Hastings, I couldn’t bring a team or any clients with me from my last job,” he explains. Nevertheless, D’Avella notes that a couple of his former colleagues have since found their way to his team at Paul Hastings on their own initiative among a diverse array of professionals—a team now made up of former in-house compliance professionals (including a former chief compliance officer), former Big Four consultants, and former in-house consultants for life sciences companies.

As D’Avella explains, the work of his group is very much complementary to the traditional legal work of Paul Hastings’ life sciences law practice. “There are myriad touchpoints but very minimal overlap when you really get down to the details of the work that we do and the work that the attorneys do,” he says. “For our part, a lot of what we are doing is looking at compliance program design and governance, policies and procedures, training and communication, auditing and monitoring, risk assessments, and performing what we call compliance health checks.”

While aligned to the life sciences legal practice, D’Avella’s group reports directly to the law firm leadership—illustrative of the complementary role the two practices play in the business of the firm. This, he explains, is by design, owing in part to the pioneering role the Life Sciences Consulting Group is playing within Paul Hastings. “We have this double mandate to both deliver in the marketplace and, secondarily, to prove out the viability of the model,” D’Avella says. “While we’re very closely aligned with the life sciences legal practitioners and have been going to market hand in hand with them, building out internal go-to-market mechanisms and serving clients side-by-side, we do not officially report into any legal practice.”

All the same, cross-selling is common between the legal and consulting life sciences practices. “It’s happened with practically every client,” D’Avella emphasizes. He explains:

I don’t think I’ve written a consulting engagement letter without some component of attorney time built into it. Typically, what would happen when we were separate entities was that a client would ask me a question that would be really a question better suited to an attorney, and the way I’d have to respond was, “Well, I’m not an attorney, but here’s what I’ve seen at a few other companies—though you should really talk to counsel.” But now I can respond by saying, “I’m not an attorney, here’s what I’ve seen at a few other companies—and if you’d like, I can put you in touch with someone on our team with deep legal expertise in that area.”

“As the old military saying goes, no plan survives first contact with the enemy,” Richards says.

Similar to Paul Hastings’ Life Sciences Consulting Group, Konexo, Eversheds Sutherland’s self-described “alternative legal and compliance services” practice was officially launched just a few years ago. As Trystan Richards explains, there are three core areas of focus within the larger structure of Konexo: interim resourcing, managed services, and financial services and legal projects, which itself contains a range of advisory services. As head of legal projects operations at Konexo, Richards oversees projects and operations to “support clients [to] overcome a variety of legal challenges.” And, in line with the larger ethos of Konexo, the teams in which Richards provides these services are increasingly streamlined and flexible. “If you’d asked me even four years ago, I would have said a project team will need to include some combination of skillsets across project management, operations, technology, data, and lawyers with various areas of expertise,” he explains. “You’re still looking for those capabilities now, four years on, but you’re now looking for individuals who can wear a number of hats—for example, a project managing lawyer—in order to provide the best value to the client. The evolution of the industry means you can now find them.”

While this dynamic approach to staffing, advisory, and managed services is, for all intents and purposes, part of Eversheds Sutherland, it should be noted that some professionals working on these teams will have “Konexo” on their business cards while others will have “Eversheds Sutherland”—and that includes lawyers. As Richards explains, this is due to the flexibility of their offerings, which allows Konexo to tailor solutions that bring as many resources to bear as needed in the wider Eversheds Sutherland reservoir of talent. The idea is to start simple and be prepared to build out as the client’s problem demands. “After all, as the old military saying goes, no plan survives first contact with the enemy,” Richards says. His focus is on coordinating the parts of Konexo and Eversheds Sutherland and to adjust as need dictates. He explains:

It’s all about assessing the range of legal complexity within the work, bringing the right resource to bear, and tailoring processes to support workflow, governance, and quality. Complexity is triaged to the right level of legal experience. Konexo can bring in paralegals and junior lawyers operating to a playbook designed by a more senior Konexo lawyer. Exceptions to the playbook are escalated to the senior lawyer and, to ensure risk is managed appropriately, Eversheds Sutherland can be called upon to support with advice or where areas on niche legal assistance is needed across playbook design and dealing with escalations. So there is a structure in place that manages escalations all the way from a paralegal or junior lawyer of Konexo up to a senior partner at Eversheds Sutherland for real niche advice that we might need. There’s all sorts of permutations of that model that we would deploy to meet the client need.

In this way, Konexo operates similar to other flexible staffing service providers, aiming to employ the right professional for the task as precisely as possible. The difference is that this self-styled “alternative” service provider is housed in a large law firm, and its services are oriented toward client problems rather than service offerings, allowing its teams to blend legal and other advisory services as needed along with its other staffing and managed services. Thus, like with Paul Hastings’ Life Sciences Consulting Group and its corresponding legal practice, clients may enter the front door of Eversheds Sutherland or Konexo with one service in mind and find themselves browsing and buying from the other side as well.

“I don’t think I’ve written a consulting engagement letter without some component of attorney time built into it,” says D’Avella.

These are but two examples of how major law firms are experimenting with new service offerings beyond strictly legal. And there is little precedent to follow in building these structures, so perhaps unsurprisingly, Paul Hastings and Eversheds Sutherland offer two different approaches tailored to their unique firm strategies and strengths. Time will tell how these models evolve and what experiments come after them.

The law firm consultant

But what about the professionals operating in these new structures? D’Avella and Richards are both consultants who built significant parts of their careers in Big Four settings. Moreover, they don’t come from explicitly legal backgrounds: D’Avella has cultivated expertise as an advisor in life sciences, while Richards has done likewise in financial and managed services. And yet, here they are practicing in two of the largest law firms in the world. So we asked them bluntly: what has that been like in a law firm?

“Well, I only have a sample size of one to go by, so I don’t know how much of this is particular to Paul Hastings,” says D’Avella, “but I was immediately struck by the innovative culture and the openness to new ideas that I found here.” This perspective is not always the prevailing wisdom when it comes to “non-lawyers” in law firms. For example, Center on the Legal Profession senior research fellow Laura Empson notes in her book Leading Professionals: Power, Politics, and Prima Donnas that one law firm partner interviewed said, “The last time I went to a Management Committee meeting I thought there were too many non-lawyers on it… This is a law firm. … So, for every essential business decision, the people I believe who know best, or have the most information in this area, are the lawyers.” (For more on this, see “Steering Law Firm Strategy.”)

The law firm setting is not without its challenges for a consultant or other professional offering nonlegal advisory services.

As the head of a consulting practice in a major firm today, D’Avella has yet to encounter this line of thinking. “That’s something that really, frankly, took me by surprise—just given how new what I and the consulting practice are trying to do here is within the construct of a large law firm, how few antibodies have there been,” he says. “Everybody’s been very open-minded and super-supportive about the fact that this is different and we need to treat it differently and give it the space it needs to grow.”

Richards likewise reports that he has not come up against a lot of hurdles operating out of a law firm. “If you’re asking what is different being here in a law firm, the honest answer is it really hasn’t felt different,” he says. Despite the narrative of the Big Four creeping back into the legal services space, Richards adds that from his vantage point he is seeing Big Law respond by absorbing aspects of integrated service models. “Law firms understand that clients want more all-encompassing solutions,” he says. “Clients are starting to ask to do things in alternative way. And so lawyers, being bright people, have had to adapt to that.”

The law firm setting is not, of course, without its challenges for a consultant or other professional offering nonlegal advisory services. Indeed, being situated in a large law firm is in its own way a double-edged sword. On the one hand, reputation and resources are in many ways on your side. On the other hand, the idea of being within a “law firm” can scare clients away who often fear an hourly-billing approach and untenable bottom line. “That’s a myth that we have to dispel quite a lot,” reflects Richards. “The market is now recognizing, following a level of education, that ALSPs are a cheaper way of achieving the same effect. Addressing concerns on price is a challenge that I think all ALSPs are still facing. But I actually don’t think the Big Four are viewed any differently, and in some respects are seen as prohibitively more expensive.”

As D’Avella explains, certain approaches from his time in the Big Four have served him well practicing out of a law firm. “The importance of building teams and collaborating has really stuck with me,” he says. “Relentless client focus—that the client relationship is not about you just because you happened to receive the email or the phone call—that’s something that’s remained consistent.” As D’Avella describes, the consulting group was deliberately structured to reduce obstacles to working collaboratively, within the group but also with the firm’s lawyers. Not only does his team operate at lower cost to the firm than many associates, it also offers new kinds of value when it comes to serving the lawyer’s clients. “If we can deliver certain aspects of a given matter in a way that’s consistent with—or improves upon—what the firm would typically deliver, then that’s a big, big win for all of us.”

“The reality is that law firms are far better placed than the Big Four to win a greater share of this market, because they’ve already got established legal relationships,” Richards says.

Another throughline from his Big Four days, D’Avella continues, is not just account planning but also what he calls account focus. “Account planning is just profiling relationships within accounts and making sure we’re coordinated around those. There’s not a lot of magic to that,” he explains. D’Avella continues:

We do that now for consulting clients. It will take some more time to scale and adjust to get it right within the broader practice, whether that means changing up some of the incentives or aligning them in the right way. Deloitte, I found, was particularly strong at that while I was there—at focusing on key strategic accounts and maintaining a consistent service level driven by the right practitioners, and at making sure that the same practitioners continued to serve the client as long as the client was happy with those practitioners. The big takeaways for me were that there’s real structure and real discipline behind all of that, and that it’s something that really resonated very well with those key strategic clients. So one of my goals is to grow some of that account focus here. It’s going to take some doing to get there, but I think that is a big takeaway from the way that the Big Four go to market that I see as a real opportunity for Paul Hastings.

Going even further, Richards sees a lot of upside to operating out of Big Law instead of the Big Four. “The reality is that law firms are far better placed than the Big Four to win a greater share of this market, because they’ve already got established legal relationships,” he says. “They’ve got a law firm pedigree, and they’re beginning to fuse successfully with operational know-how and very good lower-cost legal resources interviewed and vetted by Eversheds Sutherland. You might argue the Big Four is still ahead in terms of technology, but you have to wrap tech in the right legal and operational framework to get the best out of it.” In Richards’ view, a law firm remains the best place to do that.

What lies ahead

Though they are hardly alone in establishing new types of practices outside the bounds of traditional legal services and yet still within the structures of major law firms, Paul Hastings and Eversheds Sutherland are early movers in this space. Both D’Avella and Richards, however, expect a broader shift will inevitably follow their lead.

“There’s real power in what we’re doing. Our clients have been uniformly—and I don’t think it’s overstating it—energized and even delighted when I’ve reached out to talk about what we are doing here at Paul Hastings,” says D’Avella. “I do think there can be some significant hurdles for law firms that are looking at making a move like this, especially given the particulars of a given organization—they might be cultural, they might be built around aligning incentives with the right behaviors, and then there are practical matters like conflicts that certain firms will have to face. But I can say this: the value proposition has definitely resonated with clients.”

Both D’Avella and Richards expect a broader shift will inevitably follow their lead.

To Richards, the move is all about doing more with less. “I think you have to be led by your clients, and you have to be led by the market,” he says. “So what’s the market telling us? The market’s telling us right now that institutions and companies need to be able to do more with less, and so law firms need to respond to this.” Increasingly, Richards adds, clients are arming themselves with data through enhanced legal operations capacities, and it will be up to law firms to answer to those operational questions. By providing not only lower-cost solutions but solutions that extend beyond a purely legal focus, firms might have a larger field on which to demonstrate their value.

In conversations with lawyers at other firms, D’Avella still hears a lot of hesitancy to follow firms like his into the consulting space, but he does not expect that reluctance to hold if firms continue to prove the model viable. “I’ve heard from attorneys elsewhere along the lines of, ‘Well, it doesn’t make sense for us because our bread and butter practice is really deep in [a given space] and we don’t want to risk potential conflicts that might compromise that work,’” he says. “And to their points, within those firms, there likely would be a lot to navigate that could potentially make it difficult. Then again, ‘difficult’ doesn’t usually hold up for very long in the face of mounting market pressure to innovate.”

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Law Firm Responses to the Big Four Volume 7 • Issue 3 • March/April 2021

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