‘Mark Brandon: UK law is focusing too much on the wrong things’ – A response from Australasia

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Over the last weekend I (@RWS_01) got into a tweet exchange with the author of a recent good analysis post on the thelawyer.com – ‘UK law is focusing too much on the wrong things‘ – Mark Brandon (@MotiveLegal). As part of the exchange, I promised Mark a response to his article.

First off, as it has been some time since I worked directly in UK law, my reply to Mark’s post should be read from an Australasian perspective.

Second, in my reply I have used the same numbering and headings as Mark used in his original post.

So, here goes.

1. The mega-consolidators will struggle

I partially agree with Mark on this one.

If, as I think Mark suggests, law firms are merging simply to ‘purchase’ market share, then I generally agree with him. Likewise, if by ‘conglomerate’, Mark means ‘full service’, then I would also agree.

However, as someone who lives and works in an environment (#Auslaw) where there are roughly:

  • 30 law firms,
  • who earn in excess of A$50 million per year in revenue,
  • with a population of approximately 23 million people,

then I have to say that the trend of consolidation seen in the sector over the past two to three years here will, and needs to, continue.

Will some of these mergers/consolidations result in regional (Asia-wide) mega-firms? Yes, I believe they will [and indeed, with the likes of King & Wood Mallesons, have].

Will these firms struggle? Some yes (most likely those who, as Mark suggests, have consolidated solely to purchase market share), but those who have the right strategy and culture in place, ie where the consolidation is done in consultation with clients, resulting in a more efficient and better service to the client – rather than solely for the financial benefit of the partners of the firms involved, will likely thrive.

Finally, I have to say that I disagree with Mark’s comment that:

“When it comes to law firms, there is such a thing as ‘too big’.”

2. Vereins are over

As someone who couldn’t agree more with the views of K&L Gates chairman and global managing partner Peter Kalis on Swiss Vereins, how I would love to agree with Mark on this one.

Unfortunately, however, as much as it pains me (and it does!), I’m going to have to disagree with him on this one.

The first reason I’m going to say this is because of the different structures law firms across Asia can take – from unlimited liability partnerships to limited company status. For this reason, as an umbrella organisation for a regional brand, the Verein structure does serve a purpose.

The second reason I’m going to say this is more economic – the cost of running and operating an international law firm across the Asia region is substantial. The professional indemnity insurance alone must be astronomical these days. These operating costs are only going to increase and one way for non-affected partners to limit or reduce these costs would appear to be the Verein model (until such time as we have uniform agreement across the region on the form law firms can take).

For these reasons, I’m going to say that Vereins – as Swiss table tennis champions or otherwise – will be around for a while longer.

However, I say this with one caveat: to be successful (as opposed to merely existing) law firms who adopt the Verein model will need to get better at their internal culture. The carrot and stick approach will need to morph into a more collegiate approach if they’re to be completely successful.

3. The magic circle is doomed

I agree with Mark on this one. As a term, ‘magical circle’ has probably seen its day – after all: when was the last time you heard the term ‘silver circle’ used?

Also, I really need look no further than the Australian legal market over the past decade – where only two of the ‘Big 6’ continue to trade under their own name – for Mark’s merger views to hit home, so to speak.

4. The accountants will fail again

I totally disagree with Mark on this one.

My view is that – so far as Asia goes – the accountants have their strategy right this time.

Importantly, from what I have read and those who I have spoken to, accountants who have set up legal arms in the region have set their sights on the likes of DLA and Baker & McKenzie this time round. If that’s the case, they will be a force to be reckoned with.

Also, critically, if the restrictions currently in place on overseas auditors advising in the China market continue, then I believe it is highly likely the accountants will amplify their focus on their legal services operations – as I don’t see them walking away from the Chinese market without a fight.

5. ABS will remain confined to consumer-facing markets

Until a few days ago I would have totally agreed with Mark on this one.

So, what changed?  In short, the news that White & Case had just signed over the rights to all present and future client fees, as part of its refinancing deal with Citibank, broke. On the back of that news, the ABS structure might now look awfully attractive for law firms looking for working capital – so my opinion has changed and the jury may just have gone back out on this one.

6. London will fall to the US firms

Obviously, as I mentioned, I cannot speak to London. But as far as the Asian market goes, I agree with Mark on this one.

Although I would agree that, historically, being on the ground in Asia is not a strategy US-firms have wanted to adopt, the simple fact is that the market in Asia is too big, and too important to their future, for them not to get more involved eventually, which I believe has been evidenced by the recent changes put in place with the new US-led committee for Asian offices at DLA.

7. The future is about purpose, not process

Absolutely agree with Mark here. The future is about client service and purpose, and those who don’t get it or fail to practice this each and every day, will fail.

8. Top-down branding is yesterday’s news

Agree with Mark.

I would only add that the future branding of international commercial law firms in Asia is more likely to take the form of a P2P business, than either a B2B or B2C.

So, there you have it: my response to Mark’s post. Hope you enjoyed it.



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