KPMG, Deloitte and EY turn into one-stop legal shops 

Legal practices in the big four accounting firms are gaining traction with a doubling in team sizes and a number of high-profile recruits as clients look for a one-stop shop.

KPMG Law partner in charge David Morris said the firm had seen increasing demand from clients for its integrated service offerings.

“Our tax dispute resolution and controversy and M&A practices, in particular, are experiencing material growth and we have recently added new partners to our employment and real estate practices and are anticipating strong demand for their services,” Mr Morris said.

Although the firm does not publicly release its growth figures, Mr Morris said its strategy was to develop legal service offerings in those areas that have natural links with KPMG’s broader service offerings.

Mr Morris said the firm was actively looking for additional high-quality lawyers to further the depth and breadth of the practice.

“We have a very clear strategy and are absolutely focused on executing on it,” Mr Morris said.

While the revamped legal arms of accounting firms are relatively small compared to the nation’s leading law firms, they are growing fast, poaching lawyers and have ambitious goals. In a recent survey of law firm managing partners, only 25 per cent wrote them off as no real threat.

According to latest edition of the The Australian Financial Review’s Law Partnership Survey, KPMG has the third highest percentage of female partners of any firm surveyed, with the five female partners making up 38.5 per cent of the practice of 13 partners.

Momentum in past decade

Mr Morris said the firm was building its internal pipeline of female leaders and ran a program in which male partners “sponsored” up-and-coming women.

Of the eight partners at Deloitte Lawyers, only one was a woman, with the firm having a higher fee-earner to partner ratio of 3.1 compared to KPMG’s ratio of 2.2.

Deloitte Lawyers national leader James Fabijancic said despite the legal arm being established nearly 20 years ago, it has really gained momentum over the last five to 10 years.

“Deloitte Lawyers has grown its revenue base by approximately seven times over this period and has been highly profitable in doing so,” Mr Fabijancic said.

Mr Fabijancic attributed this growth to the firms focus on key specialisations with the predominant area of practice remaining tax controversy and litigation.

Approximately two-thirds of work was sourced from the Deloitte network, he estimated, and the remainder through individual practitioner relationships and reputation. “Once a client has appointed Deloitte Lawyers, retention rates have proven to be very high,” Mr Fabijancic said.

At Ernst and Young, the legal arm is in its second year and has developed six strong areas embedded within the service lines model of the multidisciplinary firm.

Inbound clients

EY Law head of Asia Pacific Howard Adams said the practice’s strength came from the corporate, property, digital, government, private equity and private client areas, which has increased following EY’s acquisition of Norton and Smailes in Perth.

“We are profitable, growing steadily and have expansion plans,” Mr Adams said.

Mr Adams said attracting and retaining top talent was “not as hard as one might think”.

He said he would like to see the practice double in size in the next two years, bringing in external partners as well as increasing internal promotions.

“I’m very focused on building a legal team that can compliment other services and clients.”

Mr Adams said clients were attracted to the firm’s model, especially inbound international clients who were requiring help with tax restructuring and changes to the Foreign Investment Review Board.

“Inbound work is low-hanging fruit for us,” he said.

PwC declined to be involved in the Law Partnership Survey.