The Big Four accounting firms—Deloitte, PwC, EY, and KPMG—once harboured grand ambitions to conquer the legal world. By the late 1990s, these global giants sought to leverage their vast resources and international reach to dominate the legal services market. However, their bold experiment ultimately fizzled out, leaving traditional law firms largely unscathed.

The Initial Hype and Early Doubts

In 1999, I was interviewed by PwC in London as they were establishing their international legal practice. On paper, the opportunity seemed ideal—a chance to be part of a new, expansive global law firm. Yet, something about the mix of accounting and law didn’t sit right with me. I passed up the offer and instead joined the international corporate group at Taylor Joynson Garrett, a TMT firm that was riding the dot-com wave.

This unease wasn’t unique. Despite the excitement, the Big Four’s legal ventures faced significant cultural and operational challenges. The accounting mindset clashed with the legal profession's distinct traditions, leading to friction within the newly formed legal teams. Additionally, conflicts of interest arose, particularly in jurisdictions where regulations prevented firms from offering both legal and auditing services to the same clients.

Regulatory Backlash and Retreat

The Enron scandal in 2001, which led to the collapse of Arthur Andersen, heightened regulatory scrutiny on the Big Four. New regulations, such as the Sarbanes-Oxley Act in the US, made it increasingly difficult for these firms to continue offering legal services alongside their core accounting functions. By the mid-2000s, the Big Four began to scale back their legal ambitions, unable to navigate the complex regulatory landscape.

Upon returning to Australia in 2004, I was again courted by the Big Four, who were still trying to make inroads into the legal market. However, the same reservations I had in London persisted. I chose to join Freehills instead, reaffirming my belief that an accounting firm with a legal practice just didn’t sit right.

PwC's legal arm in Australia was one of the casualties of this retreat. By 2007, PwC had closed its legal operations in the country, recognising that the integrated model was unworkable. The other firms followed suit, with Deloitte and EY scaling back their legal services significantly.

The Final Chapter: KPMG Law's 2024 Demise

KPMG Law in Australia limped along for years, focusing on niche areas like tax law and regulatory compliance. However, by 2024, the firm finally threw in the towel. KPMG Law’s closure marked the end of the Big Four’s legal experiment in Australia, a sobering acknowledgment that their initial ambitions were misguided.

The Takeaway: Bigger Isn’t Always Better

The Big Four’s attempt to dominate the legal industry ultimately failed because they underestimated the complexities of the legal profession. Cultural clashes, regulatory hurdles, and conflicts of interest proved insurmountable. Today, the Big Four have retreated to their core accounting and consulting services, leaving the legal world to the specialists. Their experiment serves as a powerful reminder that diversification must be approached with caution and a deep understanding of the industries involved.

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