Why lawyers and accountants are thinking about a one-stop shop

The news that Arthur Andersen has been talking to Simmons & Simmons, one of the City's leading law firms, about a possible merger is a reminder that proposed marriages among the top-flight accounting practices are not the only threat to the fabric of Brit

It has - in the words of a spokesman for Arthur Andersen - long been an open secret that the organisation, which, pending the completion of the currently planned link-ups between Coopers & Lybrand and Price Waterhouse and KPMG and Ernst & Young, is still the world's largest professional services firm, has been seeking to increase its presence in the UK legal market.

Though lawyers and rivals were doubtful when it entered the field back in 1993 by setting up Garrett & Co, four years later that practice has several offices around the country, has acquired two other well-regarded niche firms and in the last financial year contributed pounds 15m to Andersen's revenues.

Moreover, it has since been copied by other leading firms. Price Waterhouse has an association with Arnheim & Co, while its would-be partner Coopers & Lybrand has a similar arrangement with Tite & Lewis; it is anticipated that the two organisations will join forces if the merger goes ahead. And the other big players are keen to follow suit.

While Andersen has been reasonably successful at picking up fairly lucrative but low-key work, it does not stand a chance of gaining an entry to the really serious deals without a connection with a big name. With the largest law firms unlikely to be attracted by such a venture, Andersen, headed by new managing partner Philip Randall, had to look at the next tier down.

Simmons & Simmons was a natural option because it has a longstanding link with J&A Garrigues, the Spanish firm that became part of the Andersen legal network last year. Though the talks have been called off, Simmons & Simmons' managing director, Alan Morris, said a link-up of this nature remained an option for the firm.

The reasons why an accountancy firm might want to gain a foothold in the law are clear enough. First, there is a perception that the profession offers more opportunities for "value-added" assignments. This is especially appealing for people who have seen their central activity - audit - largely become a commodity, with clients reluctant to value it as anything other than something they have to have done for legal reasons. Indeed, it is being argued that the drive for merger at the top of the accounting profession is coming from the firms' management consulting arms, and many are talking of traditional accounting functions being marginalised in the drive for lucrative consulting assignments.

Second, such a push fits with similar moves accountants have been making on merchant banks in corporate finance. Counting on the banks' lack of interest in the lower end of this field, they have made rapid progress in advising on management buyouts and flotations in particular.

But it is less obvious what advantages such arrangements bring for lawyers. David Furst of second-tier accountancy firm Clark Whitehill is one of those who sees definite disadvantages in such arrangements, notably in the threat to independent advice.

In deals it is not uncommon for lawyers and accountants acting on the same side to disagree on certain issues; if they come from different organisations they can debate that openly, whereas if they are both from the same stable it is more difficult, especially if the person who thinks a mistake has been made is comparatively junior, he argues.

He stresses that the one-stop shop argument is not especially convincing, since large clients do not use one law firm for all their legal work as it is, and are unlikely to change this habit if accountancy services are available as well. He is adamant that it is to the benefit of both professional advisers and their clients that they keep their operations separate while co-operating on an ad hoc basis if appropriate.

Mr Morris of Simmons & Simmons accepts that this is what he calls a "potential downside", but he can also see two distinct advantages. First, accountancy firms, by virtue of their greater size, have the resources that firms like his need if they are to achieve their goal of becoming global firms. Second, the international combination that such a multi- disciplinary partnership would produce could be something that would appeal to increasingly global clients.

Though the much-rumoured Simmons & Simmons deal appears to be off, observers do not think the matter will go away. Pointing out that the current boom might persuade lawyers that they are better off on their own, Martha Klein, editor of Legal Business magazine, said a return to recession and pressure on fees might create a situation where an accountancy firm "will convince a top City law firm or national law firm to go for at least a joint marketing arrangement".

Suggested Topics
News
people
News
people And here is why...
News
peopleStella McCartney apologises over controversial Instagram picture
Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
PROMOTED VIDEO
Arts and Entertainment
Richard Burr remains the baker to beat on the Great British Bake Off
tvRichard remains the baker to beat as Chetna begins to flake
News
i100
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
News
people
News
The village was originally named Llansanffraid-ym-Mechain after the Celtic female Saint Brigit, but the name was changed 150 years ago to Llansantffraid – a decision which suggests the incorrect gender of the saint
newsWelsh town changes its name, but can you spot the difference?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Kristen Scott Thomas in Electra at the Old Vic
theatreReview: Kristin Scott Thomas is magnificent in a five-star performance of ‘Electra’
Life and Style
Couples who boast about their relationship have been condemned as the most annoying Facebook users
tech
Arts and Entertainment
Hayley Williams performs with Paramore in New York
musicParamore singer says 'Steal Your Girl' is itself stolen from a New Found Glory hit
News
i100
Life and Style
The spring/summer 2015 Louis Vuitton show for Paris Fashion Week
fashion
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Italian couples fake UK divorce scam on an ‘industrial scale’

Welcome to Maidenhead, the divorce capital of... Italy

A look at the the legal tourists who exploited our liberal dissolution rules
Time to stop running: At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity

Time to stop running

At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

The vintage series has often been criticised for racial stereotyping
An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

An app for the amorous

Could Good2Go end disputes about sexual consent - without being a passion-killer?
Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

Llansanffraid is now Llansantffraid

Welsh town changes its name, but can you spot the difference?
Charlotte Riley: At the peak of her powers

Charlotte Riley: At the peak of her powers

After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
She's having a laugh: Britain's female comedians have never had it so good

She's having a laugh

Britain's female comedians have never had it so good, says stand-up Natalie Haynes
Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

Let there be light

Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
Great British Bake Off, semi-final, review: Richard remains the baker to beat

Tensions rise in Bake Off's pastry week

Richard remains the baker to beat as Chetna begins to flake
Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

A look to the future

It's time travel fashion at Louis Vuitton in Paris
The 10 best bedspreads

The 10 best bedspreads

Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?