Big Six accountancy firm Ernst & Young's disclosure last week of its financial position is to be welcomed for a number of reasons. Although cynics will suggest that it is motivated purely by the prospect of limited liability status, transparency is nonetheless to be encouraged, if only to let clients see the type of institution they are dealing with. The firm said it was making the move primarily to be more open with staff, a point also made by KPMG last January when it too published its accounts.
There is no doubt that financial disclosure reflects openness within a firm and consequently should be motivational. While law firms generally show no major inclination to follow suit, some have put a tentative toe in the water. Firms such as Booth & Co and Shoosmiths & Harrison have already published figures and a number of other firms will produce some figures if asked.
But while there has never been any great pressure on law firms to produce this information, this situation is likely to change. Those seeking limited liability status will certainly have to reveal their financial details; in turn this will put pressure on others to be more transparent. While Ernst & Young and KPMG's figures will create waves initially, financial openness will become the norm as more firms take up the gauntlet.
Openness aside, Ernst & Young's figures are interesting in that they reveal that the two major areas of growth are management consultancy and corporate finance. The growth of corporate finance, which grew by 24 per cent to £38.5 million last year, will certainly interest legal practices which are alarmed by the threat from accountancy firms in this area of work.
The other buoyant area of work for accountants – management consultancy – has not so far been challenged by law firms. Should lawyers be eyeing up opportunities in this field?