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Message: <blockquote data-quote="Daniel Boden" data-source="post: 11052" data-attributes="member: 487">Hi all,Here's my summary from last week's legal news - enjoy <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite1" alt=":)" title="Smile    :)" loading="lazy" data-shortname=":)" />Legal Week: Big Four Audit Split 'Would Spark Major Legal Market Assault' (3 May 2019)IntroductionIn this article, Legal Week asserts that separating the Big Four's audit departments into separate businesses would speed up their entry into the legal world.ArticleThe article begins by stating that following the pressure created by MPs after the scandals of BHS and Carillion, the CMA (in April 2019) has recommended that the Big Four separate its audit departments. As a result, EY, Deloitte, KPMG and PWC may be forced to restructure their audit function into separate entities in order to reduce market dominance.Following this, Big Four firms have stated that they would welcome these discussions but don't have any plans to separate their operations as of yet, some even criticising the CMA's suggestions. EY, for instance, has brought in Slaughter and May for advice, as it is seeking to challenge the competition watchdog's position.Indeed, many believe that this ruling, if put into practice, would have a dramatic effect on the legal departments of the Big Four.Some executives surmise that the change would result in a change in attitude by the Big Four to invest heavily in their legal offerings. This is because, if their audit functions are separated, there would no longer be any restrictions on the scope of practice nor any independence issues, and so it is highly likely that there would be a rapid expansion of legal services.This has created fear amongst smaller and mid-size law firms who will be under even more pressure to diversify their practices so as to avoid losing out to the much higher revenue and resources of the Big Four accountancy firms who have the firepower to make a real impact in the legal market.Whilst it has not yet been confirmed whether audit firms will have to separate nor the possible nature of the split, it is very likely that the Big Four's brand will be weakened and so they will have to invest in other areas, namely the legal world.However, whilst accountancy firms would be able to compete alongside law firms if the legal practice is separate from the audit department, they would have lost their USP as they wouldn't be a part of the overall brand. If the legal arms of the Big Four were separated tomorrow and then ranked alongside law firms, the Big Four wouldn't stand a chance.One executive consultant maintains however that while there could be an initial set back, this damage would only force the legal departments of the Big Four to undertake a more aggressive form of expansion, due to the sheer financial resources they have available.The article concludes with a warning that if the Big Four did decide to aggressively expand into the legal world, there would be perhaps no stopping them and the legal world as we know it would be changed forever.</blockquote>

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