Grant Thornton confirms it will not follow Big 4 in providing legal services
As Scott Barnes, UK chief executive at Grant Thornton recently declared, the world’s sixth-largest professional services firm has no plans to follow its big four rivals in providing legal services, believing that fact would conflict with its existing business within consultancy or audit market.
In a recent interview, he added “For us, expanding into legal services would create some conflicts. This is something the big four don’t seem to have a problem with.”
For Mr Barnes, Grant Thornton would be conflicted because it had many law firms as both audit and advisory clients. It has also acted on behalf of law firms during M&A transactions.
Some days ago KPMG declared that it had been awarded an Alternative Business Licence by the Solicitors’ Regulation Authority, which means it is now licensed to operate on a multidisciplinary practice basis.
After KPMG, follows PwC, whose member firm PwC Legal was licensed as an ABS at the beginning of this year. Also, EY has similar plans to expand in the sector. Therefore, Deloitte would be the only big four company not to set its sights on the potential fee income from law work.
Since two decades ago, the big four companies began a foray into legal services. In that time, the 2002 Sarbanes-Oxley Act then prohibited them from offering legal services to audit clients and they retreated from the UK market almost entirely.
Now again, they are expanding beyond their roots in audit into areas such as consulting or law.
Last Monday, Grant Thornton UK reported that their revenue was up 9 per cent to £512m during the fiscal year ended June 30. Growth was driven by its advisory practice, where revenues were up 15 per cent to £286m. Audit grew 4 per cent to £135m, while tax revenues were flat on the previous year, at £91m.
Due Mr Barnes, the growing weight of advisory is set to continue: “I expect to continue to see more and more growth in the advisory and consulting market relative to audit and tax, both markets that are very competitive and pretty mature.”
In opinion of Grant Thornton’s CEO, the pitch for new audit business for the company is that “we’d offer a first-rate service as we don’t have as many audit clients so these clients would be more important to us than they would be to a larger competitor”.
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