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. Continue Reading