Given that accountants claim to be increasingly worried about the threat of negligence claims, it might seem odd for them to seek to move into a field that is generally reckoned to be the next target for litigants. But the law holds certain attractions for accountants.
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.
Second, such a push fits with similar moves they 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.
Some observers suggest that the attempt to add legal services to this type of capability is rooted in a desire for accountants once again to be seen as the primary business adviser. Some firms, including PW, have recently been going out of their way to label themselves "business advisers" rather than accountants. In keeping with this, it is perhaps significant that the PW initiative - to be led by Chris Arnheim, a corporate partner in the London office of Leeds-based Hammond Suddards - has, like Garrett & Co before it, its roots in tax. For this is a field that lawyers and accountants are continually battling over.
However, Alastair Gorrie, head of PW's European Union law unit, is at pains to stress that the firm will be looking to move from this field into more regular corporate law standbys, such as the buoyant area of mergers and acquisitions.
He claims that the move is market-driven, with clients expressing an interest in being able to instruct single firms of lawyers around the world. Since even the largest City law practices do not yet have the international links of their accountant counterparts, the thinking goes that Big Six firms - which already have a significant legal presence in continental countries - are in a good position to fulfil this need.
As with the Andersen venture, PW's as yet unnamed practice will be part of an international network of law firms associated with the accountancy organisation. This enables it to get around Law Society rules - which have statutory power - outlawing multi-disciplinary partnerships (MDPs). Solicitors cannot be partners with accountants or other professionals, and while they can join firms associated with accountancy groups, they cannot share fees.
Labour, in the shape of its legal affairs spokesman, Paul Boateng, is understood to be sympathetic to a relaxation of the rules, which is thought to be a spur to others going down this route. However, the Law Society's view remains that it fears conflicts of interest. A key value of solicitors is that they stand apart from others, says a society spokesman, pointing out that this might be threatened by too close a connection with those responsible for, say, audit.
Indeed, such a development would appear to open accountancy firms up to more accusations of the sort they already face - about difficulties in maintaining impartiality in their audit work, say, when they are also carrying out consultancy and tax work. It also goes against companies' increasing willingness to shop around for professional services rather than build up long-standing relationships, so that firms are picked on their merits for particular transactions or assignments.
Nobody really expects a practice such as the one PW is planning to pose much of a threat to the top five City law firms. But some other practices are perhaps being a little arrogant in suggesting that going to an accountant for legal advice is - in the words of one senior partner - "a bit like going to the dentist when you need a doctor".
The fact that Garrett & Co has been able in its three-year existence to attract senior managers and partners from the biggest names in the British legal world as it expanded to 30 partners and 70 fee-earners suggests that these ventures cannot easily be dismissed - though some observers suggest that the firm has been rather more successful in London than in the regions. Even allowing for the fact that Arthur Andersen seems to have a Midas touch that helps it to confound the sceptics, it is likely that other big accountancy firms will soon be in the market.
With Garrett apparently able to demonstrate that it is possible to survive through some form of association that leads to a certain amount of referrals from the accountancy firm and not fall foul of the Law Society's rules, Coopers & Lybrand and KPMG have both been rumoured to be about to take the plunge. Nick Land, senior partner of Ernst & Young, has been even more open. "The firm has been considering setting up a legal practice for some time. This is a real option and we are looking at the best way of implementing this to provide the maximum benefit to our clients," he said last week.
If the accountants are right and they are successful in attracting clients to their international networks, the sufferers are likely to be middle- ranking firms which have already been struggling to emerge from the recession in the face of competition from regional practices, such as Leeds-based Dibb Lupton Broomhead and Mr Arnheim's firm, Hammond Suddards.
At Eversheds, perhaps the closest legal equivalent to the accountants' national firms, the national managing partner, Peter Cole, believes the growth of ventures such as Andersen's and PW's is inevitable and is even confident that multi-disciplinary practices will be allowed before long.
He is also not about to underestimate them as potential rivals. But he is not sure whether his firm would want to join one. As well as worrying about the cultural issues associated with putting accountants and solicitors together, he says: "Often, having lawyers and accountants from different stables gives an added element."
The crunch will come if an accountancy firm is able to persuade a significant legal player to link up with it. In the meantime, it is also not certain that businesses will seek to use one-stop shops any more than they have been prepared to continue instructing the same advisers for all types of work. But this willingness to explore all options could assist the development of MDPs. Indeed, the fact that aggressive Yorkshire firms as well as other less well-known names from outside London are making progress demonstrates that clients are not as enamoured as they were with reputation. If they are prepared to look beyond the Square Mile for legal advice, who's to say they will not sometimes opt for an accountant?Reuse content