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The Big 4: An Emerging Alternative in Austria

The Big 4: An Emerging Alternative in Austria

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The move by the Big 4 firms – Deloitte, KPMG, EY, and PwC – to capitalize on their client lists and their multi-disciplinary capabilities by extending the ability of their legal arms to compete with traditional law firms is by now well-established. In Austria, their legal arms have begun competing aggressively for talent as well.

Launch and Expansion in Austria

Unsurprisingly, all the Big 4-associated law firms in Austria were founded by partners from high profile traditional law firms.  “Our firm is ten years old and was initially founded by Andreas Jank and me as a spin-off of Fellner Wratzfeld & Partner,” explains Maximilian Weiler, Partner at Jank Weiler Operenyi – Deloitte Legal. “We were a small law firm in Vienna, when we first started, focusing mainly on Corporate/M&A and Banking & Finance.” Some three years later Alexander Operenyi joined from Freshfields Bruckhaus Deringer, giving the partnership its current name. “We had some projects with the local Deloitte team and they, one day, asked us if we would be interested in joining their global network – which we, after negotiating the details of the cooperation, finally did in June 2017,” remembers Weiler. As a result, the firm more than doubled in size, “with respect to employees and expertise – we recruited partners for new practice fields that we hadn’t covered before, like employment and data protection, which gave us a bigger depth of field for a broader base of providing service.” Notably, former Wolf Theiss Partner Gabriele Etzl joined the firm in 2017 and former Baker McKenzie Partner Marc Lager joined in February of 2020.  The firm now counts 25 fee earners, plus staff. “We’re still growing and still recruiting,” Weiler says, happily.

EY Law is rapidly growing in Austria as well. “We were among the first movers in Austria,” says Mario Gall, Partner at Pelzman Gall Gross – the legal arm of EY – with pride. “What was back then, in 2012, a band of 12 lawyers, numbered more than 20 lawyers some three years ago, and is now a 40-person team operating in all areas of business law.”  According to Gall, “we grew by hiring very talented lawyers, many of which started their careers in well-known traditional law firms.” Indeed, Gall himself came to EY Law from Baker McKenzie, as, last March, did another former Baker McKenzie partner, Stephan Gross.

KPMG Law has recently ramped up its capabilities as well, bringing 11 lawyers onboard – again, from Baker McKenzie – to launch its Austrian legal practice in August of 2019. “Yes, 11 of us that were engaged with Baker were approached and then left to create KPMG Law in Austria,” confirms Wendelin Ettmayer, Partner at KPMG Law Austria – Buchberger Ettmayer. “In summer of 2019 Dieter [Buchberger], I, and three more partners started, with five more lawyers. Now there are 15 of us.”

Selling Points for Lawyers and Clients

All claim that moving to the Austrian offices of the Big 4 represented more than a simple financial decision – and use almost identical language in explaining the attractiveness of their new firms.

“The biggest reason I joined Jank Weiler Operenyi, the Austrian law firm in the global Deloitte Legal network, was, to be honest, the impressive positive culture that the company beamed with,” says Deloitte Legal Partner Marc Lager, who joined Deloitte Legal from Baker McKenzie in February, 2020. “The approach towards work, teams, team members, clients … this is the core way in which a firm differentiates itself from others. The corporate culture here brings out the best in people and focuses on togetherness – it leverages all the tools it has at its disposal.”

Lager also insists that the Big 4 are, despite their size and long histories, forward-thinking. At traditional law firms, he says, “the culture, the very approach to practicing law, is different, it can be very conservative.” Such firms, in his opinion, often employ business models that are “based on individuals, are clearly hierarchal, and focus too much on billable hours in the short term.” While acknowledging the value of individual contributions and the added-value of the personal networks partners at traditional law firms are able to bring to the table, Lager believes that “this environment makes it very difficult for juniors to grow, to get access to clients. Information flows from a senior to a junior and this can lead to a communications breakdown, with incomplete information.” As a result, he says, some firms may experience a leveling-down effect – even though they have very talented lawyers working for them, those lawyers are often not given much room to progress.

“The status quo is very difficult to change, in law firms,” Lager continues, turning to what he believes his new firm does differently. “A law firm is all about getting the client to the firm, whereas here, at Deloitte Legal, it’s all about getting the firm to the client.” He says that when this became apparent to him, along with what he describes as Deloitte Legal’s innovation-orientated approach to technology – he was sold. “Sometimes you can see, in law firms, that senior lawyers do not necessarily express a desire to learn how the tech that their company uses actually works – it is viewed as something foreign. On the other hand, at Deloitte Legal, technological innovation is embraced with open arms.” As a result, he says, instead of having to use a lot of man-hours to get work done, “[Deloitte Legal] drives costs down by using all of the tech that is at its disposal. This allows for efficient use of talent – one which does not force [lawyers] to do mind-numbing work for days on end – which reduces the rate of errors and allows them to focus on legal problems.”

And Lager points to the personal focus at Deloitte Legal as well. “What impressed me was the approach [Deloitte Legal] had when they approached me – the first thing they said was that they want people to fit in well, to be able to work together.” Indeed, he says he “clicked immediately” with his new colleagues. “It went rather smoothly,” he smiles, recalling how surprised he was at the informal communication style at the firm. “At first I found it odd that such a large consultancy firm didn’t foster a culture of formality, but then I realized that it was precisely that which kept everybody in good spirits – we’re all one team and team members have to be approachable in order to have cohesion.”

Ultimately, Lager says, Deloitte Legal’s success is tied to its multi-disciplinary nature. He says he was impressed by how “quickly Deloitte Legal brings people together” and by how the company’s “cross-sectoral approach is felt from initial brainstorming on how to approach a client all the way up to the pitch and later service implementation.” He feels that this approach fosters both unity and transparency in the firm.

Ettmayer describes a similar culture at KPMG Legal. “The enthusiasm and the spirit of people in KPMG are contagious – everybody is focused on growing legal as one of the core areas of the company,” and he says that it is “most exciting to be able to contribute to that development.”

Ettmayer says that the true difference between KPMG and a traditional law firm is that the former deploys a “fully integrated” service. At KPMG, he says, he is in constant contact with both tax and M&A advisers, and the cooperation is tighter. This exchange, he says, is facilitated by the fact that KPMG Law is in the same building with the rest of KPMG, so “we have a chance to see each other daily and have a much more familiar and relaxed type of communication.”

Mario Gall says he was attracted to the “multidisciplinary environment and the fact that both EY and EY Law are present in a large number of jurisdictions around the world.” He notes that this allows him and his colleagues to “cooperate closely with other service lines of EY, such as Tax and Transaction Advisory Services, both in Austria and abroad.”

Gall believes that this type of a cross-sectoral approach “reduces complexity for the clients who no longer need to coordinate different streams of consultants,” in order to harmonize the stream of services they receive. As a result, he says, “our services are aligned before we approach clients with our analysis and recommendations.”

The Managing Partners of the legal arms of the Big 4 in Austria insist that their firms are able to provide a distinct kind of service to clients as well.

“To be honest, I think that’s the future of legal services,” says Weiler. “We provide one-stop-shop services with other fields of expertise, such as tax, financial advisory, or consulting.” He feels that Deloitte Legal is able to assist multi-disciplinary teams in “nearly all fields of expertise – more or less all over the world. Only very few law firms, if any, can offer similar services within their own network.”

As a result, Weiler says, “a lot of business that used to go to traditional law firms is being rerouted to the Big 4 law firms – which is the goal for all of us that work with them, to get referred within our network and not have work go to outside law firms.” He describes having exclusivity in performing all legal work for clients as the “endgame scenario.” And he’s confident about achieving that goal. “I feel that, in a few years, our work will become even more disruptive due to clients desiring a one-stop-shop rather than wanting to go around shopping for firms that practice in specific areas.”

Lager, his colleague at Deloitte Legal, chimes in. “The Big 4 have a breathtaking client base – and by leveraging this and using these connections the options and the potential for further growth are huge. I firmly believe that if Deloitte Legal, and other similar-minded Big 4 companies, continue to work more efficiently and employ a more relaxed cultural approach – the traditional law firms cannot compete.”

Gall agrees with this being one of the key reasons why EY Law gets a lot of work. “Clients very much appreciate our multi-disciplinary approach. In combination with our large network, it increases efficiency a lot.”

Even though “personal relationships that are still quite important in Austria,” Ettmayer feels that what brings clients to trust and decide to engage KPMG Law is “the increase of quality stemming from close cooperation with tax, advisory, and audit colleagues.” He feels that the “dense network” KPMG has is a “real universal service provider.”

Ultimayely, Ettmayer says, the “integrated approach” of the Big 4’s legal arms “really benefits the clients. It’s our task to convince them that integrated services – IT, Management Consulting, Transformation Advice, Tax – can all be received in the same place.” Precisely for this reason, he insists that he won’t be going back to “practicing law traditionally” anytime soon. “I’m just very excited to be a part of a company that strives to grow in this one-stop-shop manner – I’d rather try and persuade teams from established law firms to come to us rather than go back to one myself.”

And to some extent, the success of one benefits all. “The bottom line is that to get awareness and eminence of the one-stop-shop concept,” says Weiler in conclusion, “everybody needs to win.” Thus, he says, “in that respect, we want to see the other three Big 4 firms succeed with their legal arms – so we all can. We are not direct competitors and I hope for all the best for the other three Big 4 legal arms – we are all in this together.”

This Article was originally published in Issue 7.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.