Accountant invasion looms over Irish firms
22 February 1999
16 June 2014
20 January 2014
22 August 2014
23 June 2014
25 November 2013
The accountants are coming. That is the alarm cry echoing through certain sections of the profession in the Irish Republic right now, at a time when law firms, like the economy, are experiencing an unprecedented boom.
The alarm was sparked off by plans to establish an Irish practice that will be closely associated with the accountancy giant PricewaterhouseCoopers (PwC). It is the first such development in the republic, where multidisciplinary practices are prohibited, and is seen as a significant move given the international wind of change.
Under current regulations, the new practice will be obliged to operate on a standalone basis, joining a global network of law firms associated with PwC. As a result, will receive significant referral business from overseas firms while it is establishing a client base in Dublin - giving it added status and clout in the Irish market.
The man chosen to head the practice, 34-year-old Edward Evans, makes no secret of his ambition: to build it up into one of the republic's top five firms in less than a decade. Evans will shortly embark on this mission when he gives up his job as a partner at top five, Dublin-based law firm William Fry.
He has been with the company for 12 years, specialising in company and commercial law, information technology, intellectual property and e-commerce. Evans will be joined at the new practice - which is still to be named - by a team of specially recruited partners and staff. This will expand as the business grows.
The venture hopes to tap into the remarkable economic boom that has transformed a country once torn by emigration into one with nearly full employment. The transformation has been so significant that skilled Irish workers in Britain and the US are being wooed back home because of a shortage of labour.
With an average annual growth rate of 8 per cent over the past five years and inflation at less than 2 per cent, the Irish economy - boosted by significant structural funds from Brussels - has become the Celtic Tiger of Europe. Its flourishing electronics and financial services sectors are replacing a traditional reliance on agriculture. That, in turn, has created a huge demand for legal services, particularly in the corporate and commercial sectors.
Meanwhile, international companies are flooding into the republic to take advantage of the sunny economic climate and the government's generous tax regime for business. In the financial services sector alone, more than 300 top US and European companies have transferred their back-office operations to the Dublin Financial Services Centre - attracted by a 10 per cent tax rate, the lowest in Europe.
Under pressure from European Union partners angry at losing jobs and services to Dublin, the government has now agreed to increase the tax rate from 2006 - but only to 12.5 per cent.
The economic boom, coupled with Irish membership of the European single currency and moves to establish the republic as an international hub for e-commerce, has created a sellers' market among the country's law firms. Many firms are short of experienced staff and are being forced to advertise posts in the UK. So today Irish law graduates who emigrated in the bad old days when there were few jobs available, are being encouraged to return and fill the lengthening list of vacancies.
"There's a supply shortage in the market, particularly for staff with three to five years' experience in a commercial discipline," says Evans. "There are plenty of raw recruits available, but firms are finding it difficult to get experienced staff with the skills they need for today's market."
Such is the recruitment crisis, he claims, that some Irish offices now have "a Commonwealth dimension", with staff from New Zealand, Australia and Singapore.
The republic has 5,000 registered solicitors, augmented by 300 to 350 graduates a year from law schools. "That's an annual increase of 6 per cent," says the Irish Law Society director general Ken Murphy. He has heard of advertised posts remaining unfilled and newly qualified staff receiving as many as five job offers.
"The problems we have are the problems of prosperity," he declares. "They are directly related to the extraordinary growth of the economy."
Five firms dominate the Dublin law scene: McCann Fitzgerald, A&L Goodbody, Arthur Cox, William Fry and Matheson Ormsby Prentice. Together, they employ more than 600 solicitors. It is these five that will feel the pressure as the new PwC-associated firm attempts to move in on their territory.
But at the new Herbert Street headquarters of Matheson Ormsby Prentice - or MOP, as it is popularly known - managing partner Donal Roche is planning to expand the firm's tax practice to take in accountants.
All taxation, he points out, is based on laws. In Ireland, as in the US, the people best qualified to interpret those laws are lawyers. "Over here, for historic reasons, legal firms weren't as attuned as accountancy firms," he explains, "so they let it slip to accountants. It's very easy to claw that back".
MOP has been expanding its tax practice, recruiting quality staff. Last year, tax represented 9 per cent of the firm's business. Within the next five years, Roche expects this to rise to 25 per cent.
He expects the large accountancy firms to fight back. The biggest issue facing major law partnerships, he says, is the extent to which accountancy firms will compete with them head-to-head in the provision of legal services. "That is on the agenda of some of accountancy practices and it is a major challenge - starting today."
MOP, which employs more than 90 solicitors, is examining how the partnership should develop over the next five years. "Included in that agenda," says Roche, "is how we see ourselves vis-a-vis the accountancy practices - whether we should compete head-on with them, talk to some of them or enter into some sort of arrangement with them."
The threat from accountants also gives cause for concern at the Dublin Solicitors' Bar Association, according to president Hugh O'Neill.
But the organisation, which claims to represent more than 2,000 of Dublin's 3,000 solicitors, is concentrating its energies on a more immediate issue - planned legislation that will make members liable to prosecution if they fail to report "reasonable suspicions" of crimes committed by their clients.
The primary aim of the legislation being introduced by Justice Minister John O'Donoghue is to extend to solicitors and auctioneers the reporting requirements on money laundering that already apply to banks and building societies. But the reporting requirement will also cover suspicion of other crimes.
The Solicitors' Bar Association and the Law Society have been holding talks on the matter with officials from the Justice Department. O'Neill has denounced the proposal as "an infringement of the basic right of solicitor/ client confidentiality" and is adamant it should not be accepted.
The irony is that O'Donoghue - who is a solicitor himself - may shortly have some very good news for the profession. A working group set up by his predecessor is expected to report shortly that future High Court and Supreme Court appointments should be open to solicitors. At present, mainly as a result of Bar Council resistance, they are restricted to the bench of the Circuit Court.
If current speculation proves to be correct, it will create another career option for the Irish profession at a time when, thanks to the economic boom, it already has more job opportunities than it can fill.