Reemergence of the Big Four in Law

Volume 2 • Issue 2 • January/February 2016
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Life in the Big Four

New opportunities and culture

Lawyers love to trade stories of what it’s like to work within a law firm. And, to a large extent, they generally know what they are getting into when they join a firm. That is not to say law firm cultures and ways of doing business aren’t changing—they certainly are (see “Navigating a Brave New World”). However, law firm life is a relatively known quantity for the majority of lawyers.

Much less is known about the life outside of law firms and other traditional areas of legal employment, such as in-house legal departments. As David B. Wilkins, the faculty director of the Center on the Legal Profession, and Maria Jose Esteban, a lecturer at ESADE-Universitat Ramon Llull, point out in the lead article of this issue of The Practice, “The Reemergence of the Big Four in Law,” accounting firms are actively recruiting huge numbers of lawyers and are emerging as hot spots for supporting legal work. This raises the important question, What is it really like to work for them? Below we explore the work culture of the major accounting firms—and whether they will be increasingly attractive places for lawyers from around the world to work.

Attracting talent

Ian Tod

Ian Tod

Lawyers working for KPMG, Ernst & Young (EY), PricewaterhouseCoopers (PwC), and Deloitte—the Big Four—is not a new phenomenon. The big accounting firms, which now describe themselves as professional services firms, have been recruiting lawyers for years. And they continue to do so at a high rate. For instance, a January 2016 web search of the open positions listed on EY’s career website found 287 positions using “J.D.” and 114 using “LL.M.” as the keywords. When an identical search was performed on KPMG’s career website, the results were highly analogous—271 open positions with “J.D.” and 48 with “LL.M.” as the keywords. Each of the Big Four also has a web page dedicated to “life as a lawyer” within their organizations. In an interview with The Practice, Ian Tod, the former chairman of Deloitte Legal, explains, “We recruit for our legal practice at all levels. We recruit right out of university. We recruit people with two or three years of experience. We recruit experienced partners. We recruit the entire range of people.”

On one end of the spectrum, Tod notes that a central aspect of his job was convincing would-be lateral hires that joining the firm would be a smart (and prosperous) career move—after all, many top recruits were partners at major law firms earning hefty salaries and enjoying the highest levels of prestige. Tod says that he typically would make two big selling points as to why a lawyer should join Deloitte:

First, we have a compensation scheme that is not “eat what you kill.” It is compensating people for their overall contributions—sustained contributions—to the success of the firm. It is a sophisticated, goal-setting, evaluation and compensation system, which is arguably less draconian than in many law firms. Second, we are all about our clients. If you’re a partner, you know that when a client has an issue—whatever that issue is—it has to be dealt with in its entirety. A place like Deloitte gives you that platform. If it’s done in a law firm context, you are only addressing part of the issue. From a professional perspective, it’s more interesting helping clients solve the whole problem than just the technical legal aspects.

S. Lawrence (Larry) Kocot was one of those partners who made the switch from a law firm to an audit, tax, and advisory firm. Prior to joining KPMG, Kocot had been a practicing lawyer at three of the nation’s most respected firms: Epstein Becker & Green, Dentons, and Akin Gump Strauss Hauer & Feld. He had also held high-level positions in government and was a fellow at the Brookings Institution. He was at the top of his game. So, when KPMG approached him about joining their ranks, Kocot admits he was initially hesitant. “When KPMG approached me, I had three or four jobs going simultaneously. I didn’t need another!” Yet shortly thereafter, Kocot found himself leading KPMG’s newly formed Center for Healthcare Regulatory Insight.

Lawrence Kocot

S. Lawrence (Larry) Kocot

Talking about why he took the position, Kocot mentions both the substance as well as the people. “KPMG provided me an opportunity to combine my policy and legal background in a practice that could support a much broader set of services to respond to the increasing demand of my client base,” Kocot says. “That drove my decision making.” He continues, “The model we have here allows me to support my clients with a broad array of skills and expertise well beyond what I could provide when I was practicing law.  Moreover, everyone I met was someone I wanted to work with.”

Although Kocot was an experienced professional when he joined KPMG, the Big Four are not just recruiting seasoned lawyers. Tod notes that Deloitte hires across the board. “You’ll find Deloitte recruiting people at NYU and Harvard—particularly international students who are going to go home to France or Germany or wherever.” Kocot agrees, noting, “There are job opportunities at every level in a place like KPMG for attorneys at whatever stage of their career.”

Responding to client demands

“Company leaders,”says KPMG’s Kocot, “Are looking for informed business judgment, which often goes beyond straight legal interpretation. Most law firms can’t provide that type of model.”

One of the main value-add propositions of the Big Four is their holistic, client-based service setup and their ability to offer globally integrated business solutions. David B. Wilkins of Harvard Law School notes that the things that typically keep general counsel awake at night tend not to be “legal problems” but what he calls “problem problems”—problems that have a legal component but are broader, potentially touching on a host of other critical company concerns like public relations, business strategy, or human resources.

Ian Tod discusses Deloitte Legal at a 2014 conference hosted by the Center on the Legal Profession on “Disruptive Innovation in the Market for Legal Services.” Video begins at Tod’s statements.

Moreover, internally within companies, general counsel are being asked to be more than technical experts; they are being asked to be trusted advisors. “Today’s general counsel and senior legal staff,” Kocot says, “are asked to contribute more to their organizations. Company leaders are looking for informed business judgment, which often goes beyond straight legal interpretation and provides an array of expertise beyond legal services. Most law firms can’t provide that type of model.”

Tod gives the example of an M&A transaction as emblematic of the need to offer more than technical, legal expertise—and why the Big Four are often able to offer more-integrated services. On the one hand, he notes, any M&A transaction includes a host of legal work: due diligence, the transfer of property rights, contractual matters, and the like. On the other hand, “from the client’s perspective, those are technical details—important because they can be messed up, but ultimately technical matters to be solved.” Tod continues:

What the client really wants is the implementation of a strategy. For instance, what are its postmerger integration plans? A typical law firm would say, “I’m sorry. You’ll have to go talk to your consultants about that.” Or, what’s the communication strategy? Not to mitigate liability, but to achieve the right focus from an HR perspective. Most law firms don’t have communication specialists who can figure that out. At Deloitte, we would say, “When you’re doing an M&A transaction, you’re in charge of the legal aspects, but you’re also part of a larger team addressing the entire issue for the client.

For this point of view, the breadth and depth of the accounting firms arguably grant them distinct advantages over traditional law firms. For instance, Kocot notes that KPMG’s internal capabilities offer real value-adds to his work and therefore his clients. KPMG has internally developed such skills and services as data analytics, econometric modeling, forensic accounting, data analysis, computer forensics, and other litigation support, which Kocot can draw on. “When I was working in a law firm, I had to go out to contract for these things. At KPMG they are right here. The expertise that KPMG offers is a deeper and much broader level of support than a traditional law firm can offer. It is really synergistic with what practicing lawyers are doing, because practicing lawyers can’t stray into different areas and provide a lot of deep expertise without scale.”

Creating culture

“We put as much emphasis on our people as we did on our clients,” says form Deloitte Legal chairman Ian Tod. “Because what is a professional organization? It’s professionals helping clients with their issues.”

The workplace culture of the Big Four is also a source of pride. For instance, all four of the Big Four are ranked in Fortune magazine’s 2015 list of the 100 Best Places to Work. (All four have also made the list for at least eight years running.) Moreover, on a more on-the-ground level, Deloitte Legal has been recognized as the most attractive legal employer by Czech students for the past two years. Similarly, the firm’s affiliated French law firm, TAJ, received the Business Case of Action Award for its exemplary actions in favor of gender equality at the United Nations’ 2013 Women’s Empowerment Principles conference.

Tod is not surprised that the Big Four rank so highly in employee satisfaction, as it drives the very essence of what professional services firms ought to be about. He tells The Practice that when he was at Deloitte, the firm’s mission statement was “Helping our clients and our people excel.” He explains: “We put as much emphasis on our people as we did on our clients because what is a professional organization? It’s professionals helping clients with their issues. Therefore, recruiting, retaining, developing, and helping top professionals excel was one of our main missions.”

Of course, housing diverse professionals under one roof risks creating culture clash (see “Navigating a Brave New World”). Nevertheless, Kocot says that is not something he has experienced at KPMG. He notes that because work is focused on serving the client’s needs, all the various professionals are working toward a common mission. “Whether former lawyers, accountants, tax professionals, or data analysts, everybody here is working for their clients’ issues. When you walk down the hallway, you can’t tell who may or not be former lawyers. We’re hired to solve problems and provide solutions—and that’s what everyone is focused on.”

Workplace norms are also highly valued—and distinct from traditional conceptions of law firm life. “KPMG is very sensitive to its employees’ needs and the culture of those coming in. When people say, ‘This is one of the best places to work,’ they mean it.  When you talk to the people at KPMG, it is very clear that they want to come to work. They’re not here because somebody’s watching the clock.”

This tone is reinforced from the top, Kocot explains. “What I was immediately impressed with when I came here was leadership consistently talks about a culture of inclusion, a culture of diversity, a culture of cooperation, and a culture of working together toward mutual goals. They treat their employees as if they’re the number one asset.”

Deborah Holmes, the Americas director of corporate responsibility at EY and herself a lawyer, agrees that leadership is critical to developing a culture of teamwork and diversity. From 1996 to 2005, Holmes led initiatives to increase gender diversity at EY. On her watch, the number of female partners tripled from 80 to 241, which doubled the overall percentage of female partners at the firm from 6 percent to 12 percent. The number of women with flexible work schedules also tripled from just more than 300 when she began her initiatives to nearly 1,000 in 2005. In an interview with The Practice, she stresses that senior leadership was critical to this success. “None of this would have been possible without the active support of two EY CEOs,” says Holmes. Indeed, two weeks after she accepted the position, Holmes discovered she was pregnant with her first child.

I called the CEO to tell him that I would regrettably have to back out since I did not want to leave him in the lurch when I took my maternity leave. Not only did he refuse to accept my ‘resignation,’ but he told me that I should be nothing but happy for this joyous news—and that he would see me on Monday. For the next six months, we flew together to 19 cities, talking about the initiative and selecting the offices for the pilot projects. The CEO made it clear on these trips that I was his representative, putting my office on the same floor as his and eventually making me a partner in the firm.

Holmes also stresses how hard EY works to build a culture of inclusion. For example, to address the work-life concerns, the firm instituted telecommuting, casual dress, and flextime schedules. And, just as importantly, to normalize those procedures, the firm created an online database of people with flexible schedules that “had previously been individually negotiated with their supervisors, and—with a very few exceptions—kept hush-hush.” In such a setup, she stresses that metrics are important to ensure that work is being performed at a high level and that everyone is treated equally. “Our pilot on networking within the firm began rigorously measuring how opportunities for good work and stretch assignments were actually being allocated both within and outside of formal assignment systems,” says Holmes. “We maintained a detailed Excel spreadsheet that recorded every assignment given to every person in the office to ensure that women received the same-quality work as their male peers. At the same time, we monitored all the work that was being done for each office’s top clients to see whether women were getting the same opportunities to work on these critical matters as men of similar age and ability.”

While concerted attempts to build more employee-friendly and inclusive work environments are becoming more common within law firms—and firms have made progress in fostering professional and personal development—the Big Four have undoubtedly invested significant resources into developing their employees and creating cultures of inclusion. Mark Weber, the assistant dean for career services at Harvard Law School, says, “Accounting firms have been at the forefront of innovation and changes in the workplace, and law firms have traditionally followed suit. If you want to see what law firms will be doing, study what accounting firms have been doing. For example, accounting firms were the first to offer flexible work arrangements, provide hoteling office space arrangements, and establish alumni clubs for its former employees.” Whether law firms can foster the sort of internal culture and professional development opportunities frequently demanded by employees remains an open question. What is clear, however, is going forward, the competition for talent between law firms, the accounting firms, and other emerging players will unquestionably involve questions of workplace culture and satisfaction.

Destined for the Big Four?

Are all lawyers destined to work for the Big Four? Certainly not. Indeed, there are many reasons the legal profession has developed in the ways that it has and created the institutional norms that underpin it—including strong professional norms that ought to be strongly guarded (see “Professionalism in the 21st Century“). By the same logic, are the Big Four the correct places for all lawyers? Again, certainly not. Lawyers come in many stripes and colors and are looking for a diversity of things with respect to work and life. Nevertheless, the legal profession is becoming increasingly aware of the variety of career paths available to lawyers—no matter the stage of their careers. In that respect, the Big Four may increasingly be viewed as an attractive option as they actively try to recruit lawyers to join their ranks and as lawyers learn more about the opportunities and workplace cultures potentially afforded in the accounting firms. In that context, Tod offers a closing perspective: “There are millions of lawyers out there who are going to be interested in different things. Places like Deloitte tend to attract lawyers who are fundamentally interested in the multidisciplinary aspects of work. That really differentiates those who come to us from those who are focused more on single-service legal practices.”

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Reemergence of the Big Four in Law Volume 2 • Issue 2 • January/February 2016

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