Los Angeles Tax Partner's Move to Mayer Brown Signals Big Four's Limitations

Michael Lebowitz moved from White & Case to PwC in 2016 because of the accounting giant's vast resources. But the firm's auditing business was an obstacle to servicing some of his clients.

November 05, 2018 at 05:04 PM

4 minute read

By Dan Packel

Michael Lebowitz, who just joined Mayer Brown's tax practice as a partner in Los Angeles, has a sharp read on the Big Four accounting firms' ambitions for delivering legal services in the United States.

That's because the international tax adviser just spent the last two years as a managing director in PwC's tax practice. In fact, Lebowitz has spanned the Big Law/Big Four divide throughout his 35-year career, having also served as a partner at KPMG, in addition to partnerships at White & Case, DLA Piper and Baker & McKenzie.

“There is a business case for an accounting firm to make the jump to practice law in the U.S.,” he said. “It really doesn't matter whether it's an accounting firm or a global law firm, at the end of the day, it comes down to how effectively you're serving clients.”

Lebowitz said PwC's depth of resources—giving the firm the ability to respond to changes around the world—helped persuade him to leave White & Case for the accounting giant in 2016. At the time, the platform made sense for his clients.

But another obstacle emerged, from the perspective of client service. Thanks to the 2002 Sarbanes-Oxley Act, he was unable to provide tax services to his clients who also use PwC as an auditor. That prompted him to eye a return to a traditional law firm.

The list of prospects was short.

“With tax reform both in the U.S. and Europe, there's only going to be a few law firms able to deliver the capabilities that multinational corporations are going to be needing around the world,” Lebowitz said, naming Baker & McKenzie and DLA Piper in addition to Mayer Brown.

“They have a phenomenal tax controversy practice,” he said of Mayer Brown, adding that part of the firm's appeal came from the prospect of building the tax transactions practice in California as a complement.

“I was looking for a place where there was a solid fit with my client base and where I saw the opportunity to grow and add value,” he added.

Lebowitz is the sixth attorney to join the firm's tax transactions and consulting practice in 2018, joining new arrivals in New York, Palo Alto, California, and London.

He acknowledged the appeal of the Big Four firms to fellow attorneys in the tax space, but cautioned that each of the firms was in a different place, noting that PwC was ahead of its rivals. A recent report by Acritas supported his conclusion, naming PwC the strongest brand of all alternative legal providers.

“One of the things that drew me to PwC originally was the fact that they were farthest along the spectrum in harnessing their legal capabilities around the world,” he said. “It remains to be seen how they're going to able to continue that journey in the U.S. and bring PwC legal to their U.S. clients.”

The catch, he added, is that many clients still want the same firm to provide legal services both inside and outside of the U.S. The Big Four firms may be able to provide this in the future, but they're not providing it yet.

But even if they do, client service will remain the key differentiation point.

“The competition is really about who can most effectively serve the needs of a client. What the platform is in many respects misses the point,” Lebowitz said. At accounting firms, he was competing with global law firms, and at the law firms, he was competing with the accounting firms.

“There may be geographies that your particular firm doesn't have in-house, but even if you had all those geographies in-house, it still depends on how you're going to serve those clients in those geographies,” he said.