You can’t fault PwC’s chutzpah. Last week it announced that it was taking on half of GE’s worldwide tax team in a managed services deal that was described by Harvard Law’s David Wilkins as another example of ‘the rapid blurring of the boundaries between what used to be thought of as separate and distinct professional services’. Here’s some more chutzpah and some more blurring: PwC’s Law Firms’ Survey asks firms for detailed information on financial performance. Chinese walls or not, several FDs who spoke to the Lawyer expressed deep unease at sending commercially sensitive information to an organisation that is also competing with those firms for legal services mandates. Similar reservations are expressed about letting the audit and tax consultants into the building.
So here’s the initial question for PwC: how long can you get away with providing business services to a market you are also competing with? Isn’t this doomed?
The answer is no, it’s not in the slightest bit doomed. PwC has been consistently smart about what it wants long-term, and right now what it’s doing is disrupting its own business. However strong its law firm consultancy service is, it pales into insignificance against the growth potential of its legal arm, which grossed £60m in the UK last year alone with a 24 per cent increase in billings. Yes, PwC may have lost audit clients among the top 100 – Burges Salmon and Ince & Co being two examples – but at the same time, it has won Clifford Chance and Herbert Smith Freehills. Neither CC nor HSF is likely to have sleepless nights over PwC as a competitor; they’re too busy worrying about the US firms.
And PwC is the antithesis of the way US firms operate over here. The Lawyer’s data shows that it has made 28 partner hires worldwide in the last two years. In Asia Pacific it has made enormous strides, with Australia seeing nine hires in 2016 alone. In the UK, though, it’s a different story. Eleven of the partner hires have been in London, from firms such as DLA Piper, Osborne Clarke, CMS and Baker & McKenzie. But six of those were senior associates or of counsel at those firms. Hiring senior associates into partnership is almost always the mark of a firm that has difficulty recruiting. What that data tells us is that while the client-side brand is stunning, it doesn’t have the same draw for laterals. It is the polar opposite of the individualist US firm approach, which is all about partners with a book of business. The PwC machine doesn’t need finders; it needs minders and grinders, because the strategy is set from the top.
Last week PwC won a spot on the Government legal panel through a consortium with Howes Percival, Holman Fenwick and Sharpe Pritchard (none of which, by the way, uses PwC on audit, according to their latest LLPs). PwC has somehow managed to convince the trio that it’s not really a competitor and is instead a benign collaborator. That’s chutzpah, and then some.