Writing in Bloomberg Law, Sam Skolnik and Amanda Iacone report that recent initiatives to lower the costs of legal services in at least three western states may inadvertently make it easier for Big Four accounting firms to enter the U.S. legal marketplace. This could, in turn, present a major threat to Big Law.

The proposed changes, which would affect state bar rules regarding law-firm ownership in California, Arizona and Utah, are intended to stimulate competition by allowing closer collaboration with “professionals in tech, data analytics, and accounting” – thereby reducing legal-service costs in civil and family courts. If these initiatives are successful, it seems likely that other state bars would soon follow suit.

The Sarbanes-Oxley Act (2002), which includes a prohibition against audit firms offering certain non-audit services, has so far prevented the Big Four from offering legal services in the U.S. – and this Act would not be affected. What would be modified are rules imposed by most state bar associations that are based on the American Bar Association’s Model Rule 4, which forbids lawyers and law firms from “[sharing] legal fees with a nonlawyer” or partnering with nonlawyers “if any of the activities of the partnership consist of the practice of law.”

If law-firm ownership rules are altered in this way, the Big Four accounting firms could open law offices in the affected states or take other steps that would allow them to expand their services into the legal arena while continuing to conform to the Sarbanes-Oxley Act.

If the movement for more access to justice for regular citizens winds up opening a lane for the Big Four to pursue corporate clients in the U.S., Big Law could be in trouble. The Big Four’s war chests are exponentially larger than those of even the country’s richest law firms, and their tech capabilities are often greater. – Bloomberg Law

An EY executive director told a legal-tech conference recently that the Big Four has no “secret plan” to put Big Law out of business. But plan or no plan, it is clear that Deloitte, PwC, EY and KPMG could soon have the option – and the resources – to encroach on the territory of the country’s largest law firms. If that happens, it seems unlikely that they would look the other way.

I am very interested to know your thoughts on this or any other matter related to the law, either in the comments section below or directly via email.