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15 Top Takeaways: “Generative AI, ChatGPT and the Future of Law: Silver Bullet or Shot in the Dark?”

6 Visions Of Firm Ownership If Law Got A Do-Over

What would law firm ownership look like if attorney regulations were wiped from the books tomorrow and the industry had the opportunity to start over from scratch?

Law360 Pulse posed that question to six thought leaders and received six very different perspectives — each exploring the idea of nonlawyer ownership of law firms — on what law would look like if the industry had the opportunity to begin anew.

Tom Barnett, Senior Vice President and Divisional General Counsel for UnitedLex, contributed to this story and wrote:

The legal profession has taken a narrow view of the scope of ancillary services that may be offered to clients. Services supporting core legal functions have been deemed acceptable while broader services, from consulting to technology, generally have not. But does it have to be that way?

Contrast that with the accounting profession. Big Four firms are now referred to as consulting or advisory firms rather than simply accounting firms as in years past. This is not merely a semantic evolution: Revenue from consulting services has increased significantly, and in some cases, has equaled or even exceeded that of the traditional audit and accounting services.

Why did they choose different paths? I believe the critical difference is the position each profession takes on the relationship between conflicts of interest and allowable services. The legal profession takes the view that law firms exist to provide legal advice and a minimal number of related support services, period. That is, services are restricted horizontally across the law firm’s entire client base. While this has helped perpetuate a professional monopoly, it’s created a vacuum filled by other multibillion-dollar consulting, technology and service firms.

Large accounting firms did not cede such ground. They have been offering consulting services in addition to their traditional audit and accounting functions for almost 50 years and this relatively nonrestrictive service model has continued to grow and expand. The accounting firms evolved to a view that while the types of services they could offer their audit clients was restricted — vertical limitation — for non-audit clients, those limitations did not apply. Thus, the accounting firms could expand services horizontally as much as they wanted.

And expand they have. In 2020, the largest of the Big Four, Deloitte, reported revenue of $47.8 billion, while the other three ranged from $29.8 to $43 billion. By contrast, the top four law firms reported revenue in 2020 in the range of $2.48B to $4.15B for the number one firm—an order of magnitude less than the Big 4.

This story was published on Law360 Pulse. To read more, visit 6 Visions Of Firm Ownership If Law Got A Do-Over.

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