Legal business development news

Musings on the announced closure of Clifford Chance’s Bangkok office

At the end of last week I read with sadness the decision by Clifford Chance (CC) to close its Bangkok office. While I’m always saddened to hear that a law firm will be closing the doors on one of its offices, in the case of CC Bangkok it’s personal.

Let me take you back to 1998

The year was 1998, and what would become known as the Asian Financial Crisis (AFC) had just come crashing through the door like an unwanted drunk guest to spoil what as a pretty good party. At the time this was still known as the ‘Tom Yum Goong‘ crisis in the local Thai press and the horrific murder of Australian accountant Michael Wansley (shot 8 times) was still a few months away (10 March 1999).

In short, the full measure of the financial mess, both in Thailand and the region, was only just becoming known.

What was clear however was the fact that a number of international law firms were making serious noises about entering the local market. Allen & Overy, Linklaters, Herbert Smith, Mallesons, White & Case, Freehills, Freshfields, Coudert Brothers, as well as Clifford Chance all had some form of ‘fly-in, fly-out’ operation and were either opening a local offices or expressing an interest in doing so.

Meanwhile, Baker & McKenzie had been around for so long that almost anyone who was anyone in the local Thai legal world had ‘graduated’ from that firm.

Working with one of Thailand’s leading local firms at the time – Wirot International – I was privileged to have had a front seat to much of this activity.

If you had asked me early in that year (1998) who Wirot Poonsuwan – Founder, Managing Partner and Owner of Wirot International – would have merged with (and yes, he was fortunate enough to have several dance partners), my answer would likely have been Herbert Smith.

In the end Clifford Chance offered him a sweater that he simply couldn’t refuse and we all moved over to what would become known in Thailand as Clifford Chance Wirot (CCW) on 1 January 1999.

I often wonder what would have happened if Wirot had gone with Herbert Smith? Local legal history would have been very different, that’s for sure.

As it is, over the course of the next two years core members of what was Wirot International would leave CCW for Linklaters, Freshfields, Courdert Brothers (anyone remember them? They took on Freshfield’s operations when they departed Thailand)  and, eventually, Norton Rose (which itself was a sort of offshoot of Linklaters).

1999 would be a big year for CC. Not only was it the year the firm ‘merged’ with Wirot International, but they would also merge with Rogers & Wells in the US that year (we would joke that it was a three way merger and some may argue with the same level of success!). It would also be the year that CC’s Managing Partner at the time, Tony Williams, would step down and go on to found the highly successful Jomati Consulting (probably a wise move in hindsight).

And yet, from the start I was never quiet sure what CC’s strategic aims were in having a Bangkok office.

Were they looking to pick-up a large amount of debt recovery/restructuring work that was going on around town? Possibly, Wirot Poonsuwan had been at the forefront of discussions to changes to Thailand’s insolvency law to allow for US-style Chapter 11 restructurings to occur (Wirot wrote a weekly article in the Bangkok Post at that time [1998]).

Were they looking for the growing amount of divestment work going on? Possibly. Wirot did some of this work, but Simon Makinson and his team did more of it and they would go and join A&O (with whom Simon had a relationship as a trainee lawyer).

Were they looking for the NGO / Infrastructure work? Not really, Linklaters picked up Wilailuk Okanurak – who would go on to succeed Chris King as Managing Partner of the Bangkok office – to run a very successful infrastructure practice (although she does lots of other things).

What they did do was bring in the wonderful Andrew Matthews from Italy (along with his Ferrari if I recall correctly). But his practice at the time was aircraft financing, not the sort of thing you’d have expected to see done from Bangkok: but hey, why not…

My own view at that time then was that CCW’s strategic reasoning for being in Thailand was muddled. In part that was one reason I would leave CCW to join my good friend (and previous colleague at Wirot International) Pichitphon Eammongkolchai at Linklaters (where I would go on to enjoy 7 more years of fantastic times and memories).

Fast forward to 2017

Despite this, and despite the fact that there was some real hitters on the local scene at the time (late 1990s) in Siam Premier (to have a JV with Australia’s Allens – must be something with Allens and JVs!) and Chandler & Thonk-Ek (now part of the Japanese firm Mori Hamada & Matsumoto) to name two, the firm that was CCW would go on to to survive almost two decades.

That’s quiet and achievement in this marketplace.

And while much has changed – Wirot is no loner there, nor is Tim Jefferies; much remains the same – Andrew was there the last time I checked and current Managing partner Fergus Evans was a very junior lawyer back in the day.

So clearly something worked.

And so I will be very sad when I hear the firm has closed its doors for the last time. Particularly so given I believe the strategic decision for doing so is [probably once more] completely wrong.

Moving their ASEAN focus to Singapore is something CC should have done in 1998, not 2018. Having persevered to 2017, it seems short-sighted to close the office so shortly after the establishment of the ASEAN Economic Community (AEC) gives it access to a market of US$2.6 trillion and over 620 million people.

But that’s just my view.

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Linklaters, Schrage and rewarding the team not the individual

On June 30, 2015 Michael Schrage – a research fellow at MIT Sloan School’s Center for Digital Business (and author of Serious Play, Who Do You Want Your Customers to Become? and The Innovator’s Hypothesis) wrote a fabulous article on the Harvard Business Review website titled ‘Reward Your Best Teams, Not Just Star Players‘.

I remember reading Scharge’s article and thinking to myself at the time that law firm managers could learn a lot from it. I may even have posted a link to the article on my LinkedIn feed.

In the article, Scharge sets out that “top management should seek out talented teams, not just gifted individuals” and that “people need to feel that the benefits of being team players measurably outweigh the perceived and real costs of compromise and self-sacrifice“.

Scharge then goes on to set out that getting the incentives right and appropriately aligned in an organisation – such as a law firm – requires the firm embracing what he calls the 5 As:-

  • Acknowledge
  • Attribute
  • Assign
  • Award
  • Assess/Analyze

Concluding that “The 5 As are the essential ingredients for facilitating a transformation in teamwork incentives. They can put the right “I” in your teams.

With news overnight (Australian time) that my alumni firm Linklaters is “to ditch individual partner metrics to target team performance“, we may just be on the way to achieving Schrage’s goals.

And it may just be me, but doesn’t it make more sense to reward “client-winning, business development, training and innovation” as collaborative efforts rather than at individual partner level?

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Do senior BD people have a seat at the top table?

I’ve often wondered if senior business development professionals in law firms truly have a seat at the executive table. People often tell me they do, but my gut has always had this niggling suspicion that maybe they actually don’t.

Well, a review of ‘Aligning Marketing and Business Development Resources for Law Firm Growth‘ – Results from the joint Legal Marketing Association and Bloomberg Law® research study  published overnight my time (Australia) would appear to answer some of these doubts – at least from a US standpoint, as one of the first charts in the report looks at exactly this issue:

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My take on this chart is that most law firms see the role of BD as being the executors/executers of a law firm’s business strategy, but not necessarily the developers of that strategy.

In other words, only about 36% of senior business developers can truly claim to have a seat at the top table.

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The BIG takeout from this year’s Altman Weil CLO Survey

Altman Weil published the 2016 edition of its Chief Legal Officer Survey overnight Australian time. I may well post some more of my thoughts on this year’s content in the coming days, but what I wanted to share with you immediately is what I consider to be one of the most damning charts I have ever seen as it relates to business development, legal spend, and client relationship management:

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That’s right, when asked the question:

Considering the ten law firms that receive the largest portion of your outside counsel spend, in the last 12 months how many of those firms have provided you with an analysis of spending data that was useful to your law department?

An overwhelming majority of CLOs (73%) responded “none”.

So, if you work for a law firm looking to differentiate your services; then the answer is it really isn’t that difficult.

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Why asking someone to work 2,000 billable hours a year will kill their spirit

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According to a post by Casey Sullivan of Bloomberg, earlier this week US law firm Crowell & Moring announced that it would increase its billable hour requirement for associates, from 1,900 hours per year to 2,000 per year. This new target will take effect 1 September 2016, but on the plus side 50 pro bono hours will count as billable.

15 Years ago I would have cried out “all kudos to you”. Back then my yearly billable target for an English ‘Magic Circle’ firm was 1,400 hours and I flogged my guts out to achieve that. So if you can effectively put 50% of billables on top of what I was doing (and trust me when I say I wasn’t going home at least one day a week), then you’re a better person than I (or so I would have said then).

But if you really need validation of what asking someone to work 2,000 billable hours a year means, then I would like to recommend you read “The Truth about the Billable Hour” by no less an institution than Yale University. In that publication, Yale caution aspiring lawyers that if you are being asked to “bill” 2201 hour, you need to be “at work” (includes travel time and lunch, etc.) 3058.

Taking that further, from an Australian law perspective, if you are being asked to bill 2,000 hours a year then you need to bill 8.3 hours a day (assuming a 48 week year and you never get sick; which, if you are being asked to do this, you most likely will be). That means you are very likely going to need to be “in the office” around 12 hours a day – and that assumes no write-off by your partner or leakage.

But here’s the question: “What difference does this make?

I ask this because I wholly agree with the following comment my friend Kirsten Hodgson made when I posted a link to this article on LinkedIn:

“why would you reward the number of hours someone spends working? Surely it would be better to focus on how to deliver value smarter and more quickly. This doesn’t incentivize innovation or any type of process improvement.”

Exactly right, you’re measuring all the wrong things!

Leaving aside the Balance Scorecard argument, asking someone to do 2,000 billable hours a year doesn’t take into account:

  • client satisfaction
  • realisation (it’s a utilisation metric)
  • working smarter
  • innovation

or many other metrics.

And for those who may point out the benefits of this including 50 hours pro bono I say this: the Australian Pro Bono Centre National Pro Bono ‘Aspirational Target’ (ie, where we would like to get to), is 35 hours per lawyer per year.

But probably more importantly than all of this is this:

–  if you ask someone to do this, then you really leave them very little time to do anything else.

This really should be a concern, on the business front because you leave almost no time whatsoever to train them in the business of law – ie, you kill any entrepreneurial spirit they may have. And, crucially, the only metric that really counts to them is that all important 2,000 billable hours (keep in mind that like I was, they’re very young). Which for a profession that has the mental health issues we do, is not good.

For all of these reasons, I’m hoping no other law firm follows this. But sadly I think they will.

Oh, and if you are a law firm client reading this post you might just want to look up whether your local jurisdiction has a “Lemon Law” rule that applies to provision of a service.

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How long before we see a ‘Red Team’ service in #Auslaw?

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Of note overnight (OZ time) was news that Bernero & Press (Wendy Bernero and Aric Press) have launched a service called: ‘The Red Team’.  Described as being “A Lifeline for Marketing and Business Development Departments” the aim of The Red Team is to provide:

“…high-quality, experienced marketing, communications, and business development professionals to law firms on a project basis or to fill temporary needs.”

Sounds very similar to the sort of lawyer placement service we are seeing from the likes of Crowd & Co here in Australia, only in this case the target market is specifically support services.

I have to say that outsourcing back office services such as marketing and business development was something I saw becoming popular in Asia during the Asian Financial Crisis in late 1998 and I have often wondered when we would see such a move take hold in the West.

Today may just be that day.

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$180K for a First-Year Associate – so what!

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One of the big news items this week has been the decision by Cravath, Swaine & Moore to raise its starting salaries for first year associates to $180,000. Cries of “Not worth it!” and “What value do first year associates provide clients?” (answer: probably none) can be heard from all four corners of the planet.

My view on this though is so what? I don’t really care what you pay your first year associates. In the same way I don’t really care what you pay your other associates or partners. Nor do I really care what your rent is costing you.

Unless, that is, I get to thinking that: I am the one paying for all this. In which case, I suddenly become very interested.

But here’s the thing: I’d only really start to think that I’m the one paying for all your luxuries – the boat you have moored at the marina, the sports car you drive, the house you live in, the first year associate you can call on day and night – if I didn’t value the service you provide me. In other words: If I didn’t think I was getting value for money.

So if you’re one of the many private practitioners questioning the move by Cravath, Swaine & Moore, my only comment/question is this:

If you are providing your clients with a value for money service offering – and you are able to communicate this, why should it bother you?

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