Summing up accountants
4 December 1999
8 May 2014
1 May 2014
25 November 2013
11 November 2013
6 June 2014
Accountants have radically improved the services they provide to lawyers, according to the fifth annual survey by The Lawyer, in association with Baker Tilly accountants.
The results of this year's survey - on how lawyers view their accountants - indicate that the majority of lawyers are happy with the services accountants provide, believing that their accountants understand their business.
This year's upbeat response contrasts sharply with last year's survey, in which lawyers fiercely criticised accountants for not delivering the services they wanted.
The survey also reveals that half of the 100 law firms surveyed - which varied from large City firms to regional 10-partner firms - are considering forming a multidisciplinary partnership (MDP) within the next five years. And accountants are the unanimous number-one choice for an MDP bedfellow, followed by barristers' chambers.
Lawyers say that as part of this development, they would like to see "better cross-relationships between fee earners at all levels in both firms", and "greater openness about their [accountants'] MDP ambitions".
Colin Ives, tax partner at the Smith & Williamson Group, says: "I can see MDPs coming in at two levels - inter-global business and small firms on the high street.
"In those two areas there are benefits, but in between they will probably only be called for in the form of specialist firms, for example in IT or property."
Ives is calling on the professions to draw up a regulatory code of conduct because of the clash of responsibilities. "Accountants' responsibilities are to the shareholders and the general public, while lawyers are responsible only to their clients.
"We need some form of regulation to protect the public. Either everybody will lower their standards to a lowest common denominator, or standards will be raised by competition - there is a danger of it being the first," he says.
Michael Rogerson, head of legal services at Grant Thornton accountants, says: "I can envisage MDPs happening locally - in market towns where the local solicitor and the local accountant may benefit from working together - and they would probably work well in specialist areas like property, where they wouldn't be full MDPs."
But he adds: "At the moment the businesses we deal with around the country are not calling for MDPs - they normally have good relationships with their accountants and they like the fact that the two [solicitors and accountants] are separate because they challenge each other.
"The lawyers may question our decisions and we may question theirs, and that makes for a better service."
And many lawyers remain cynical about the compatibility of the two professions. For example, Ian Terry, managing partner of City firm Freshfields, says: "I am sceptical whether lawyers and accountants can work well together because they come from quite different cultures.
"Most partners in the larger law firms value their independence and would feel taken over by accountants. Clients won't want to go to lawyers who work for their accountants, they will want to feel they are going to the best in the field."
According to the survey, the key areas of concern for lawyers over the next five years include information technology (IT), business planning, partnership tax, marketing and financial advice. Marketing is also regarded as increasingly important in an overcrowded and competitive legal sector, even by the smallest firms.
Half of the respondents say they are also considering converting their firms into limited liability partnerships. This follows several high-profile lawsuits in the UK and the US, mainly involving top accountancy firms.
This year, the percentage of law firms that have changed their accountants during the last five years dropped to 65 per cent, down from 82 per cent in last year's survey.
Lawyers cite "poor service", the "need for more or better advice", "an inability to be proactive", "fees" and "a lack of understanding of our business" as the main reasons for changing accountants, although 70 per cent of respondents gave no reason for changing.
Other reasons for change include the personality of the accountancy partner in charge, change of size in either firm, and accountants being "too impersonal".
Lawyers rate the ability to "understand requirements" twice as highly as their next most important requirement, "enthusiasm and commitment". They also desire accountants who contribute to their firms as business partners.
Paisner & Co director of finance, Mark Pargeter, says: "It is only when accountants show a personal touch that they will be successful in finding work, and we are disappointed if accountants do not design their solutions specifically for us."
According to Toby Cotton, head of finance at Rakisons: "We want good advice and quickly. We want people who are knowledgeable in their field and we want access to them fairly readily so that we can have practical answers as soon as possible."
Respondents from medium-sized firms say the quality of the accountancy offered has improved in three areas - business planning, marketing and IT. However, this is not reported by small and large firms.
Respondents also say accountants' fees are good value for money, with one firm saying they were "high, but worth it".
But there is still room for improvement. The survey indicates that lawyers want accountants to be "more proactive" - a request which has been repeated throughout the last five years - and "more responsive, with more timely and frequent communication".
They also want accountants to "develop a better understanding of requirements" and "use fewer junior staff".
The survey's author, Baker Tilly, suggests that the term "proactivity" has passed into "management speak" and therefore lawyers may ascribe a variety of meanings to it.
But Baker Tilly chairman Clive Parritt says: "It is a shame that the issue of proactivity has been raised for the fifth year running. There is a missed opportunity for both accountants and lawyers here, since accountants are often well-placed to contribute to the strategy of firms."
In fact, the survey indicates that all but the smallest firms now conduct most of their strategic planning in-house, although they continue to rely on external resources for tax, litigation support and corporate recovery.
And, unfortunately for accountants, lawyers do not rate VAT as a key issue, mainly seeking VAT advice in-house.
Small firms, on the other hand, can provide rich pickings for accountants, as they rely extensively on external advisers for strategic advice.
Other grumbles are that accountants are poor at solving problems, are unable to generate new ideas, do not provide good advice and use too much jargon.
Lawyers also report no improvement on last year's "average" rating on the quality of advice given by accountants acting as expert witnesses to assess levels of damages - despite the fact that lawyers are increasingly using them for this purpose.
Baker Tilly suggests that this is because the accountants lack the necessary expertise to provide this type of litigation support effectively.