Legal business development news

KPMG: “We are not trying to be a traditional law firm.”

“We are not trying to be a traditional law firm. Our approach is different, with a focus on offering our clients integrated global legal advice and solutions, where we are able to work seamlessly with existing KPMG clients who are looking for local and multijurisdictional counsel.”

The quote above, by Stuart Fuller of KPMG Australia, in today’s Australasian Lawyer is yet another great example of why law firms need to be on their guard and wary of the Big4’s re-entry back into the legal sector.

Why?

Well, here are my big 3 take-outs from Stuart’s comment:

  1. almost nobody is trying to be a ‘traditional law firm‘ – everyone is innovating and looking to reposition themselves as strategic advisors (the current Holy Grail). In short, if you want to be a ‘traditional law firm’ – unless you are really niche, which, like many, KPMG are not – then your days are numbered in my opinion.
  2. a focus on offering our clients integrated global legal advice and solutions” – what would DLA Piper, Baker & McKenzie, White & Case, Norton Rose, Deacons (just to mention a few) make of that comment? Isn’t that precisely what they would lay claim to be trying to do?
  3. but, crucially, the following sentence is the principal reason why law firms with more than 20 partners should be concerned: “where we are able to work seamlessly with existing KPMG clients“. Why? Because the Big4 get involved earlier in the advisory/transaction life-cycle than law firms have historically done, so if the law firm is only looking to advise on the law, and not act in any consultation phase (even as early as the pre-planning phase), then they are going to be in big trouble.

But that’s just my take – as always, would be interested in your thoughts, views, feedback.

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Lawyers and ‘the amplifying factor’

On 11 January Seth Godin blogged ‘Good intentions (how to be on time)‘. Typical Seth, it’s a relatively short post; and typical Seth, it contains an important message – ‘The amplifying factor‘.

In Seth’s words:

The amplifying factor is that when they’re late, people wait for them.

So why is this relevant to your firm?

The answer:- how familiar does this [2015] post by Bruce MacEwen (Adam Smith, esq) sound:

(3) We recently had a meeting scheduled with the partner on the matter at the firm’s offices in midtown. (I was not present.) Our representative—one of the two wardens of St. Michael’s—arrived about five minutes early and ran into the partner in the firm’s reception area; he was heading for the elevator to go out to get coffee.

He kept going.

My colleague sat in the conference room for 15-20 minutes awaiting his return. When he did appear, the plan was to conference in the other St. Michael’s warden on the speakerphone. He didn’t know how to do that.

This is a perfect example of ‘the amplifying factor‘. And in law firms I see this behaviour every single day…

As always, would be interested in your views.

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Is it time for ‘ARMs’ to replace the ‘RFT’ process?

Last Friday, 2 March 2018, Alex Berry, in the UK’s Legalweek, published ‘The end of panels? Barclays adviser shake-up provides vision of RFP-free client relationship‘.

Berry’s article outlines reaction to Barclays Bank’s announced shift away from the traditional [and largely, IME, procurement-driven] panel review process – in that, by the end of this panel term, in 2021, Barclays will not be re-tendering its panel.

The good news for the current private practice client relationship partner(s) – but probably not the many tender writers out there (including me) – is the news that:

“When the latest panel appointments come to an end in 2021, Barclays will fully move over to the new model, with lengthy panel reviews – and the laborious RFPs they entail – becoming a thing of the past.”

Which, begs the question – “What new model?”

The answer according to Berry is something termed:

‘active relationship management’.

Think about that for a second: ‘active relationship management‘ – then ask yourself: “How that differ from BAU (business as usual) in your firm?”.

Berry’s answer:

‘active relationship management’  – “will give the bank more flexibility to manage the size and composition of the panel, with law firms added and removed from the line-up on an ad hoc basis.”

But hang on a second – ‘Isn’t that what the whole RFT process is?’

Isn’t that what we have been talking about for years, vis-a-vis the whole rationalisation of panels?

It would appear not.

In Barclays Bank’s case:-

“Barclays argues that this model will help it to develop deeper relationships with its long-term advisers, while the bank is also looking to increase its use of alternative fee arrangements and move towards the “redundancy” of the hourly rate.”

Really?

Replacing a legal panel with an ARM structure, with no end term, with the aim of helping the client “develop deeper relationships with its long-term advisers”. I’d second that.

But, “the bank is also looking to increase its use of alternative fee arrangements and move towards the “redundancy” of the hourly rate” – sorry, but wrong platform to have a constructive discussion on this issue.

End result:- likely to be a churn a burn until the next RFT.

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How much do you love your client?

I read an article last week in which Jeffrey Cashdan, a partner at King & Spalding, who represents Coca-Cola, is quoted as saying he had banned all [Coca-Cola] competitor drinks from his home.

Think about that for a second…

…banned all competitor drinks from his home!

That’s a hell of a range. And a hell of a commitment, especially if you have children under the age of 20 running around!

So I started to think:- how many of the products in my home belong to my clients?

And I was pleasantly surprised by the answer – a fair few.

But I was also surprised how many competitor brands were in the house.

So I got to thinking, if we expect loyalty from our clients (whether that’s expertise or brand), how many of us out there are willing to go as far as Jeffrey Cashdan, who would appear to walk the walk when he says:

“I’m all-in for my client,”

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Altman Weil’s latest report: ‘Cost certainty trumps process efficiency’

Following on from my post last week that the ‘Billable hour remains the pricing method of choice for Australian law firms’, Altman Weil’s ‘2017 Chief Legal Officer Survey’, published later in the week – and now in its eighteenth year – throws a different light on this debate.

The big take-out for me can be found on page vi of the Executive Summary – namely that in-house lawyers now see ‘cost certainty‘ as being more important to them than ‘process efficiency‘.

Specifically, page vi states:

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“Costs over process”.

Think about that for a second – because it’s massive if you happen to be in private practice.

Crucially, though, is this comment (also on page vi of the Executive Summary):-

It is easier for law departments to demand cost reductions from providers and let them determine how to achieve lower fees.

So what do we have here?:-

  • cost certainty over process efficiency, and
  • private practice being allowed to determine how to achieve lower fees.

QED: If you’re in private practice and don’t have, (a) a robust Legal Project Management system/program, plus (b) data and analysis on the profitability of fixed fees that you can/should be offering…

… then your firm is likely in a lot of trouble.

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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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