Egan-Jones Says AI Could Cut Professional Services Fees

Egan-Jones said in a press release that AI could reduce fees and margins at audit, consulting, law and engineering firms. Its commentary expects small teams using AI to match the output of larger practices and cites KPMG, which pressed its own auditor to pass on AI savings and won a 14% fee cut, as a demand it expects every audit client to make.

The commentary says senior employees also face pressure because AI makes more expertise readily available. Lower barriers to entry could let smaller firms compete with established providers on price and quality without building large teams.

Egan-Jones also expects AI to weaken pricing power for some software and data providers as the Model Context Protocol gives models direct access to external tools and information. It says startups can reach scale with less capital, which could compress venture returns, while job losses among screen based workers could put short term downward pressure on housing prices.

Egan-Jones says the commentary was not written by its credit analysts and is meant as a framework for institutional investors and risk managers.