It’s with some reluctance that I link to The American Lawyer‘s Global 100 rankings (or at least, to the article about the rankings — the actual list is subscriber-only). I have an aversion to anything that roughly equates “law firm success” with “profit per equity partner,” which most of these rankings tend to do, because there’s a lot more to most law firms than that.
But the article, which details how UK firms have vaulted past their US rivals into the Global 100′s upper echelons, is instructive for at least one reason, illustrated in this excerpt: “The irony is that the English firms have succeeded by following the lesson of their American peers: They’ve hedged their bets. For U.S. firms, in the past that has meant a healthy dose of litigation and bankruptcy work to balance a corporate shortfall. For the British, the strategy has been geographic: spreading their risk across several continents.”
With respect, referring to the Magic Circle firms’ international expansion as “hedging their bets” is to misconstrue offence for defence. It certainly makes sense to diversify a firm’s practice areas, a lesson Cadwalader learned a little too late. But that’s not a growth strategy, it’s a risk management tactic — a way of minimizing the damage inevitably associated with any practice area that’s prone (as most are) to waxing and waning.
Striking out into developing markets and placing a stake in foreign ground is the opposite of risk aversion — it’s an assertive approach that will certainly hurt overall profits for a number of years and could potentially blow up altogether. But in a global economy, it’s a risk that’s rapidly becoming a reality of doing business. Any firm that does or wants to count major entities among its clients can’t be content with a heavily fortified home base and a few outposts on the perimeter.
Check out the math in the article: Allen & Overy for the first time brought in more revenue from its overseas offices than it did from London. … At Clifford Chance, about $1.56 billion of the firm’s $2.66 billion in revenue came from international offices, with a growing proportion from emerging markets. An office in Abu Dhabi is expensive to open and incredibly difficult to keep populated — but by 2018, if not well before, it will seem like the height of recklessness for a major law firm not to have established a solid base there.
Or for that matter, look at India. A long-running Indian court case (is there any other kind?) concerning the country’s ban on foreign law firms is moving towards resolution (HT to the FP Legal Post). No matter which way the court rules, that policy is coming to an end: Tony McDaid, the practice director at No5 Chambers, is confident that practice rights in the country will be liberalised and that law firms, both domestic lawyers and their global counterparts, need to start preparing now. “There will be major developments in this area in the next two years,” he predicts. “It is essential that relationships are formed now so an understanding of the market is met.”
It’s one thing for huge law firms with vast resources to be aggressive in this field (whether they choose to be or not). What can the rest of us do? Start by recognizing that although the giant firms start out with great advantages in money and name recognition, globalization levels the playing field for everyone, including you. You might not be able to patiently sustain a money-losing administrative office in Mumbai or Bengalru for years, but you can do what the big firms are doing: promote your profile and build relationships.
If you want a piece of the globalized action, blog about it, and link to the best bloggers or legal writers in your target jurisdiction. Identify local firms with a profile and vibe similar to yours, maybe through an international network, and strike up a correspondence (everyone from small towns to kindergarten classes chooses a “sister” town or school in another part of the world — your firm could do something similar). Find and connect with local professionals through LinkedIn, Plaxo, Twitter, Legal OnRamp or even Facebook — these tools exist specifically to give individual professionals the means to build networks without having to fly 12 times a year to Qatar or Beijing.
Whatever you end up doing, start by reorienting your thinking around what constitutes a “risky venture” in the law these days. Being conservative is now the risky approach; clinging to the status quo has the greater downside. This is not a good thing for most lawyers and the way they think. But that’s precisely why it can be a competitive weapon for you.