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Deloitte to Become Sri Lanka’s Second Largest Professional Services Firm After PwC Exit

Accounting giant Deloitte is acquiring some of rival PricewaterhouseCoopers’ (PwC) Maldives and Sri Lanka network firms, according to a Deloitte memo seen by Reuters, strengthening the company’s presence in the South Asia region. After the deal, one of the largest such combination deals in the region, Deloitte will have 28 partners and 800 people, a person with direct knowledge of the matter said. PwC’s Sri Lanka and Maldives firms will join the Deloitte group with effect from Oct. 28, the memo said.

In the 1990s, the Big Five accounting firms- Arthur Andersen, KPMG, EY, and PricewaterhouseCoopers- made a concerted effort to enter the legal services market. By the end of the century, they had built legal networks directly owned or closely affiliated with them in virtually every vital market worldwide. These networks, along with those of the smaller national and regional accounting firms, competed with leading domestic and global law firms in both tax and nontax legal work.

But the Big Four have now begun to change strategy. Although they are still pursuing the high-end, business-critical, and complex tax work that their audit clients require, they are also increasingly attempting to use their global scale and the breadth of their business and functional expertise to develop innovative business solutions for their corporate clients that include a full spectrum of legal services.

The evidence for this is in the way that the Big Four now describe their legal offerings on their main Web sites. Until recently, most of the information about these networks was hidden in individual country-level Websites and tax sections of the site, but by 2012, at least three of the Big Four-Deloitte, KPMG, and EY-had established a legal service line as a hypertext integrated within their collections of global services on their main Web sites and linked to a separate Global Legal Services Network (GLSN) Web site.

For example, when PwC hired a former DLA Piper UK partner in 2009 to help establish PwC Legal Middle East, the new office was described on the PwC global Web site as “the first of many offices we intend to open across Africa, Asia-Pacific and Eastern Europe” (Lind Reference Lind2010). Similarly, when EY announced that it planned to double its investment in legal services in Asia in 2011, it said the investments would be used “to strengthen our position in key markets such as Indonesia, Australia, and the Philippines and further to strengthen our strategic alliances with top international law firms” (EY2011).

The goal is to demonstrate that the Big Four can seamlessly integrate legal services into practical business solutions delivered at cost-optimized through efficient processes and technologies. This is a far cry from the days when the big accountancy firms competed with elite law firms for the same lucrative, highly specialized work they now seek to offer their clients. This approach is a significant threat to the long-term viability of the independent law firm model in its present form.

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