The power of category brands

With the Big Four, White Shoe, Bulge Bracket, Magic Circle – and even SHREK – category brands are everywhere in the elite professional services market. Their value and impact are often overlooked.

In law, strategy consulting, investment banking, accountancy, and executive search sectors, some of the most valuable brands in the market are not owned or controlled by anyone.

A feature of these markets is that clients have long needed to navigate a crowded field of competing brands. There are still hundreds of law firms and executive search firms despite massive consolidation in recent years.

So, to help them navigate, markets created category names to identify certain tiers of firms – more often than not, the top tier.

Category brands in elite professional service markets are somewhat esoteric

Rabbits from hats

In the UK legal market, the top firms are known as the Magic Circle, a term coined around 30 years ago by journalists and since adopted by many clients. Less well defined these days, the White Shoe law firms were the equivalent in the US along with the Bulge Bracket banks (so named because their names appeared in a bigger – bulging – font on the deal tombstones).

More recently, as the name suggests, the top firms in the global executive search market are known as the SHREK firms (simply the initials of the five largest firms that dominate the market).

And, of course, there is the most monolithic category brand of all – the Big Four accountancy firms (although none of them likes to think of themselves as ‘just’ accountants these days and prefers something like ‘professional services networks’).

Category brands exist in many other markets (Big Tech, Big Oil, Big Pharma, etc.) but are usually only used by industry observers and insiders rather than customers and clients. No one drives past a filling station and says, “let’s fill up at that Big Oil brand over there.”

Almost all large companies want the credibility of having a Big Four firm do their audit

Elephant in the room

While many of the individual brands that make up the categories rarely, if ever, refer to themselves by the category brand names, in most cases, they benefit tremendously from them.

Take the Magic Circle. Clients often admit that to give reassurance to their board of directors, they appoint a Magic Circle law firm to advise them on their ‘bet the farm’ deals and disputes, despite previously having had a long and fruitful relationship with another firm. In this case, it’s rarely because the Magic Circle firm has better skills or capabilities – but because, as the adage goes, “nobody ever gets fired for buying IBM”.

Almost all large companies want the credibility of having a Big Four firm do their audit – in some markets, they are legally obliged to use one – but at the same time, this credibility comes primarily from the Big Four brand, not the firm’s brand itself. Although, of course, the two are connected.

But if that seems obvious, think about two brands in Big Tech, Apple and Samsung. These brands are most certainly not interchangeable in the minds of their customers.

While it’s highly advantageous for these firms, it’s also a little scary to think that much of their value proposition to clients is wrapped up in a brand that neither they nor anyone controls.

The SHREK brand is not meant to be entirely positive, as the name suggests.

Frozen in time

On the other side of the coin, in some situations, the individual brands that are part of a category brand struggle with it.

The Magic Circle law firms are highly conscious that the term anchors them to the UK market, whereas their strategies are firmly fixed on global and, in particular, US expansion.

And the SHREK brand, whilst acronymically accurate, is not meant to be entirely positive, as the name suggests.

White Shoe is a much older term in the US legal market and, as such, carries some serious social and cultural baggage along with its credentials. At best, it calls out the highest quality and most prestigious firms. At worst, it denotes elitism, stodginess and culture generally out of touch with the modern business world.

Nevertheless, because no one controls it, the term is still used by many in the market to denote quality, even if the precise makeup of the group has become increasingly blurred over time.

Please don’t feel too sad for the Slaughter & May partners left behind whilst their peers sailed off over the global horizon.

Continental drift

Where the category brand works well for the individual firms involved, it’s interesting to observe that, consciously or unconsciously, these firms seem to adopt a kind of group dynamic in how they develop and position themselves in the market.

Flick through the websites of the SHREK firms, and you’ll find it you could easily swap the logos and have difficulty working out which one is which. On one level, that signals a lack of ingenuity on the part of the firms involved in differentiating themselves from the pack. But on another level, it might well signal that these firms recognise the benefits of not straying too far from the path and risk losing some of the market benefits the category brand gives them.

Back in the UK legal market, Slaughter & May was once the ‘5th Beetle’ in the Magic Circle, but as the other 4 set their sights on international expansion, S&M held back and adopted a highly UK-focused strategy.

These changes were initially slow, like the apocryphal frog being gradually heated up in a saucepan. Still, now, looking back over 20 years, they have entirely diverged to the point where Slaughter & May is today no longer considered a Magic Circle firm by many market observers.

Please don’t feel too sad for the Slaughter & May partners left behind whilst their peers sailed off over the global horizon. The way private partnerships like law firms work, they can maintain a relatively small number of equity partners and still individually earn vast amounts of money.

For now, at least. However, if the market were to move against their core business (UK-focused companies transacting and litigating in the UK courts), they might find themselves cut off from the market with no way back.

The power of category brands makes them impossible to ignore as part of a firm’s brand thinking.

Follow the leader

Given the stranglehold the Big Four firms have on the global audit market, it might seem obvious that the next biggest firms (BDO and Grant Thornton) would want to position themselves as challenger brands, like Virgin to BA or Southwest to American.

But that assumes that clients are open to the value proposition of an ‘outsider’. If the unspoken or even spoken reality is that boards first and foremost insist on a Big Four firm doing their audit, then overtly positioning yourself as ‘not like the Big Four’ might be detrimental, even if it makes you feel better doing it.

Boring as it might sound at first, the most valuable brand strategy could be to attempt over several years to position BDO or Grant Thornton as ‘an insider,’ remarkably similar in every way except size to the Big Four. I get it’s a counter-intuitive approach, but given the context, it could be the right one.

What’s in a name?

Category brands in elite professional service markets are somewhat esoteric and ultimately quite challenging for any firm to do a great deal about. However, their power in clients’ minds when choosing between firms for the highest paid work makes them impossible to ignore as part of a firm’s brand thinking.


Ian Stephens

CEO and Founder of Principia, bringing deep expertise and experience in strategic branding to the unique challenges of the global professional services market.