From Big Four to Bulge Bracket: How category brands shape the professional services industry

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

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

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

So, to help them navigate, markets created category names to identify certain tiers of firms—most often, 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).

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

Category brands exist in many other markets (Big Tech, Big Oil, Big Pharma, FAANGs, 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, they benefit tremendously from them in most cases.

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.

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, consider two brands in Big Tech: Apple and Samsung. These brands are most certainly not interchangeable in the minds of their customers.

While this is highly advantageous for these firms, it’s also a bit 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 hand, 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.

Freshfields – one of the Magic Circle firms – deliberately made some noise in the press about wanting to distance itself from the term and would prefer something more like the ‘Global/International Elite’. Good luck with that, given the kind of names the market tends to adopt!

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 a 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 group dynamic in developing and positioning themselves in the market.

Flick through the websites of the SHREK firms, and you’ll find 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, 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. 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 gradually heated up in a saucepan. But today, looking back over 20 years, they have entirely diverged to the point that Slaughter & May is no longer considered a Magic Circle firm by many market observers.

Please don’t feel too sad for the Slaughter & May partners left behind while their peers sailed 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 Big Four firms’ stranglehold 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 counterintuitive approach, but it could be right. Back to the more fluid premium legal market, Weil is a great example of an ‘outsider’ successfully repositioning as an ‘insider’.

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.

If your firm is part of one of these category brands (and while I’ve focused here on the best-known global ones, these category brands exist at every stratum of the professional services market), it makes sense to engage with it as part of your brand thinking.

Ian Stephens

CEO and Founder of Principia, Ian is the trusted advisor on branding to leaders of many of the world’s most prestigious international professional service firms and knowledge-intensive B2B businesses across a range of sectors including law, consulting, strategy, technology, engineering, and innovation.