The market to provide legal services is a competitive one, and law firms are not competing only with one another. That's a familiar refrain as reports come steadily about the Big Four accounting firms' exploits overseas.

In the U.S. generally, and in New Jersey specifically, the picture is much different. Laws and ethics rules—chiefly those prohibiting the practice of law by nonlawyers and barring legal fee-sharing with nonlawyers—are major impediments to the sort of market-shifting moves happening in Europe and Asia.

But that doesn't mean that the relationship between lawyers and accountants in the state hasn't evolved over the years—and that much more evolution couldn't be in store.

Frank Cannone of Gibbons.

In some areas of work, accounting firms “are as much of a competitor as another law firm would be,” said Frank Cannone, chair of the corporate department at Newark-based Gibbons, who regularly works deals, including cross-border and overseas transactions, involving accounting firms. “I do think this dynamic of accounting firms migrating into the practice of law is happening and will continue to happen because there's demand for it overseas.”

“In the end, they're going to be disruptors,” Cannone said. “Right now the industry is getting disrupted on a very small scale.”

He added, “it's certainly an aggressive evolution overseas.”

Indeed. Earlier this year, for example, KPMG's legal services arm made moves or announced plans for moves in the U.K., France and Hong Kong, and reported large revenue gains. (KPMG has upward of 2,300 legal professionals in 76 countries, Law Journal affiliate the American Lawyer reported). Also in 2019, Deloitte became the last of the Big Four to launch a law firm in Hong Kong, as EY and PwC already had done so, in 2015 and 2017, respectively.

In the U.S., meanwhile, it's common for accounting or consulting firms to employ lawyers, though the lawyers may not provide legal counsel.

A Big Four invasion might not be imminent stateside, but according to New Jersey lawyers and accountants, competition does occur, including with some work that has traditionally been the province of lawyers but doesn't amount to legal services per se.

“They're passing us by, and they're better businesspeople,” one law firm leader said of accounting firms providing consulting services.

The lawyer, who asked not to be named because of relationships with accounting firms, said numerous common tasks can be done—or mostly done, pending only legal review—by accountants or nonlawyer professionals: Among them, drafting wills, estate plans, employee benefits documents or executive compensation documents.

“What the accounting firms do is say, 'we're not your lawyer. … So we're going to give you these documents, and you take them to your lawyer,'” the lawyer said. “It's a very polished product, and … [usually] the lawyer isn't going to have much to say.” The revenue difference to the law firm is “a couple of hours of review rather than dozens of hours” of billable work, the lawyer said, adding that there is “as much as 80 percent less legal work … when you're reviewing rather that creating documents.” What might have been a $25,000 fee might be a $2,500 fee, the lawyer said.

Hubert Klein, a partner in the Iselin office of accounting firm EisnerAmper heading the firm's

Hubert Klein of EisnerAmper

financial advisory services group, said the dynamic of accountants taking on more work goes back decades.

“A lot of times you see this in the estate and gift tax arena,” Klein said. “There was a period of time when only the lawyers were doing the estate tax returns.”

He said EisnerAmper has “a measured approach” in terms of what work it takes on, and the firm employs lawyers, but those lawyers work on tax compliance matters, not as legal advisers.

“In my experience, accountants generally don't draft the agreements,” Klein noted. “While accountants can be well-versed and knowledgeable on what the law may be, I think it's always safe to refer to the attorney.”

The best teams consist of both accountants and lawyers doing legal work, but when it comes to clients, “everyone is budget conscious,” he said.

“We work with legal counsel a lot,” he said. “Accountants and lawyers should work together. At the end of the day, it's about what's best for the client, not what's best for the respective firms.”