Lexpert Magazine

September 2017

Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.

Issue link: https://digital.carswellmedia.com/i/864045

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Page 48 of 71

LEXPERT MAGAZINE | SEPTEMBER 2017 49 | ACCOUNTING FIRMS IN LAW | bast. "As opposed to going into full-service law, what we're asking ourselves is, what services complement the existing profes- sional services that Ernst & Young pro- vides?" says David Robertson of EY Law LLP's Calgary office. "We're looking to add legal services where our client base is look- ing for a seamless provider." On its face, then, there's been a change from competing for premium legal work like M&A to providing "complementary" services. What isn't being said is that the understated goals might well represent a tactic laying the groundwork for a grander overall strategy. "Since the dissolution of Donahue in Canada, the Big Four have been watching from the wings and wait- ing for the right time to make their moves," says Heather Suttie. "What they're doing now is quietly integrating legal services tar- geted to key client industries into the ser- vices they offer." Indeed, the rationale — seamless ser- vice — hasn't changed at all from the MDP days. What has changed, of course, is the rapid evolution of client-driven demands on lawyers, an evolution that emphasizes efficiency based on innovation and tech- nology in a market where purchasers of le- gal services are increasingly cost-conscious and alternative providers are eating up the commoditized end of what many law firms used to provide. ALM Intelligence has found that 80 per cent of in-house departments are in- sourcing more; 40 per cent are decreasing their use of law firms; and 68 per cent are increasing the use of alternative service pro- viders. Indeed, at a recent Canadian Club panel luncheon, BMO's General Counsel, Simon Fish, reportedly le many in the audience speechless when he said that, all things being equal, "it doesn't matter" if a company's legal work was done by a law firm or an accounting firm. What hasn't changed — at least not un- til recently — is the intransigence of the Canadian legal profession, a tendency most acutely emphasized when the Law Society of Upper Canada turned its back on al- ternative business structures, an approach not much different from its last-century demands that MDPs be owned by lawyers. "e only thing holding the accountants back is the regulatory side, where Canada is a laggard, but sooner or later there will be cracks in that," Creighton says. e most recent study of the Canadian legal market, authored by Deloitte, could well a marker of the Big Four's understat- ed strategy in their push for legal market share. "e study is a covert advertisement that Deloitte is big, integrated and un- derstands technology, and that large inte- grated global solutions provider are better providers of legal services," Creighton says. A review of the study, Canadian Legal Landscape 2017, demonstrates that De- loitte is making its point by omission. "Ac- counting firms are very cagey," Suttie says. e study surveys about 100 general counsel and law firms nationwide in the second half "to understand the current legal landscape in Canada." But nowhere does it mention the impact of the four larg- est professional services networks in the world on the market — this, despite the fact that the study predicts that 2020 will mark a "tipping point for individual firms which will impact the competitive land- scape and the role of talent in law firms." e key area in which traditional law firms are lacking, Deloitte maintains, is in their use of technology. "Perhaps our most interesting finding is that, while tech- nology is arguably the biggest enabler of achieving best-in-class status, it is largely under-exploited by both in-house legal de- partments and law firms," the study states. Nonetheless, it appears that "law firms are just turning their mind to the issue," even as an "overwhelming majority of respondents identified technology/service delivery as a major game-changer in the marketplace." But who's going to fill the gap? "Orga- nizations that invest time and resources to integrate technology and legal services will weather many of the challenges currently facing the legal industry," the study states. But who are these organizations? De- loitte leaves that question unanswered, perhaps because the accounting firm wants readers to regard the answer as self-evident. Whether it is or isn't remains to be seen, but Big Law's recruitment of Big Four alumni — Wilson at Dentons and Scapil- lati at Bennett Jones — suggests that firms are preparing to make the answer to that question much less self-evident. Julius Melnitzer is a freelance legal-affairs writer in Toronto. "I wouldn't be surprised if, 10 years down the road, law firms will have to go toe-to-toe with the Big Four or otherwise differentiate themselves in some way. … The only thing holding the accountants back is the regulatory side, where Canada is a laggard, but sooner or later there will be cracks in that." GEOFFREY CREIGHTON > BLACKROCK CANADA FUNDS

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