Let’s kick off this week with some bad news – yet more misery is looming on the horizon for mid-tier firms, as their accountancy counterparts attempt to steal a march on their clients by acting for the major financial institutions. Sorry to be blunt, but there you are.
The arrival of the Financial Conduct Authority (FCA) and Prudential Regulatory Authority (PRA) in place of the FSA has set in motion a market shakedown in the City. Not only are the banks and insurers regulated by the pair being affected, but so are the service providers that advise them.
The effect will be felt most acutely by firms in the mid-tier. Having built up decent financial institutions practices in the boom times, they may well come to discover that the demand for an accountant’s numeracy skills outweighs that for a lawyer, particularly those falling under the FCA remit.
Backed into a corner, these firms – with the likes of CMS Cameron McKenna, Addleshaw Goddard, Dentons and Stephenson Harwood good bets to be among them – face a stark choice: go into competition with US start-ups for heavyweight laterals and square up to the magic circle or find a new line of business.
There may be a third option, however – one that for now requires a bit of crystal ball-gazing. Is the advent of the niche mid-tier ABS combining the expertise of lawyers and accountants in the retro style of a 1990s MDP really too far off?
We’ve already seen in the past two weeks what impact Lord Justice Jackson’s costs reform programme is having on the ABS market, with a number of insurers looking to the legal sector for a joint venture. Quindell’s £500m deal to handle motor claims for the RAC is just the start.
Could the mid-tier see benefits in going into business with accountants? It just might be an attractive proposition for clients looking to rationalise their advisory spend. For some, there could be a profit to be made in reinvigorating the multi-disciplinary partnership model.
As Jonathan Ames reveals in his feature, the legal accountancy firm is just a germ of an idea right now, but it may not be too far from reality.