The big four accountancy firms have sent the Securities and Exchange Commission (SEC) letters asking for a last-ditch reprieve on auditor independence proposals that threaten accountancy-tied law firms worldwide. Revenues at KLegal, Landwell and Tite & Lewis will be hard hit unless the SEC changes its mind.
Under the Sarbanes-Oxley regulations, accountancy-tied law firms outside the US will not be able to work for SEC-registered clients. Referral levels vary, but some countries, including France, will be particularly hard hit because lawyers are the only professionals allowed to give tax advice under local bar rules.
One partner heavily involved with the lobbying estimated that the firms stand to lose 12 per cent of their global revenue. But he believed this would be a blip rather than the end of the accountancy-tied model.
The most strongly-worded letter is from Ernst & Young. It concludes: “Curtailing limited foreign legal services… would deprive registrants of their choice of counsel… and disrupt and cause economic harm to independent law firms that associate with accounting firms without countervailing benefit.”
Meanwhile, it has been rumoured that the SEC has caved in to demands to drop provisions for a so-called “noisy withdrawal” by lawyers who uncover clients' financial wrongdoings. UK firms were opposed to the rules, which had extraterritorial application and could have left them open to civil suits from clients.