The world used to be simple. A lawyer worked for a law firm, an accountant worked for an accountancy firm, an architect did architecture and a surveyor surveyed. Not anymore, says Giles Murphy.

The lines that defined the boundaries between professions have become blurred. In the past, restricting membership of the professions was considered important to maintain standards, but it's now possible to combine virtually any profession with another if the desire is there.

Extending the service range

In an increasingly competitive marketplace, professional firms are facing the challenges of how to differentiate themselves in the market to win work that will generate the financial return they desire. One way to differentiate is to extend the range of services that the firm can offer.

Real estate practices now provide a far greater range of services than just surveying. Similarly, some architectural firms provide interior design, law firms provide HR consultancy or trademark advice and – probably the best example – some of the Big Four accountancy firms now openly talk about their legal services.

These developments might attract new clients, but with more services available, the real opportunity is to provide a greater range of services to the current client base.

The real value of most firms is in their client base and the firm's relationship with those clients. The theory is that on the back of a strong relationship, a firm should be able to sell other services far more easily than winning a brand new client. We see this theory working in practice on the high street all the time – because we trust Marks & Spencer (M&S) to produce good quality clothes, we decide they must be trustworthy to provide household insurance.

A strategic response

To date, additional service offerings in the professions have generally been built up on a piecemeal basis. But if the multi-disciplinary model works, why not propel a business forward by merging, say, a large law firm and accountancy firm, and then bolt on a real estate practice and wealth management business.

However, while M&S might be good at 'cross-selling', the vast majority of professional services firms are poor at this. Therefore, the risk is that a multi-disciplinary practice may end up as essentially just two firms working side by side, without realising the benefits of the synergies between them.

The response from some may be to stay niche and specialised as a way of differentiating themselves. Whatever your view, multi-disciplinary practices are here to stay and will only develop further. Firms therefore have a choice between joining forces and focusing on making it really work or beating the competition by staying as they are. Whichever path you take it needs to be a conscious strategic decision, not one that you sleep walk into.

For the avoidance of doubt, Smith & Williamson's own strategic response to the continuing development of multi-disciplinary practices is firmly that we have no intention of providing legal services. We continue to believe that our existing multi-disciplinary practice, combining an accountancy firm and investment management business, is fit for purpose.

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