in-house counsel

Does your law firm have a ‘Big Ideas Project’

Last week I read about ‘The Big Ideas Project‘, a product of the Progressive Change Institute. I have to admit to being an admirer of projects like The Big Idea Project; but news today that Clifford Chance had appointed Amsterdam managing partner Bas Boris Visser as its first ‘global head of innovation and business change’ got me to thinking:

I wonder how many law firms have adopted a Big Ideas Project to help them decide what innovation and business change they need to be adopting and implementing if they’re to be more client-facing?

And, more specifically,:

If law firms aren’t adopting something like this internally – why not?

Law firms are failing to support clients in South East Asia – really?

Yesterday I read an article on the lawyersweekly.com.au website by Felicity Nelson titled ‘Law firms are failing to support clients in South East Asia‘. This article cites recent research done by Acitas, including:

45 per cent of multinationals require legal advice in South East Asia;
34 per cent of Australian multinationals’ legal spend now goes outside their home jurisdiction; and
60 per cent of Australian in-house counsel surveyed said they needed legal advice in South East Asia

There is no doubt in my mind that Acitas research is both good and thorough. I have high regard for them.

But there is one niggling issue I have with the title of this article and that is this: while it would be fair to ‘Australian’ law firms (such as Minter Ellison or Clayton Utz) are not particularly active on the ground in South East Asia – and we can debate the merits of that strategy till the sun comes up – it’s a far cry to then extend that argument to say:

Law firms are failing to support clients in South East Asia.

And why do I say this?

Well, some firms with a presence is South East Asia and Australia – and who therefore must have a strategic plan around meeting their multinational clients needs in both jurisdictions – include:

Allen & Overy
Baker & McKenzie
Clifford Chance
DLA Piper
Linklates – Allens
Norton Rose Fulbright

Keep in mind that these are international law firms with an actual presence in South East Asia and Australia with a declared strategy of having multiple offices in order to meet the needs of their multinational clients. They’re not ‘fly-in, fly-out‘ operators; so they don’t have to worry about some of the very real strategic and cost issues that Lisa Hart Shepherd, CEO of Acritas, points out in the article and which I made only yesterday around organic growth and local knowledge acquisition!

My only question having read Nelson’s article is this then:

What the Hell are these firms doing if, as is alluded to in the article title, a large proportion of Australian and multinationals in-house counsels’ needs in South East Asia are going unmet?

and having read the results of Acritas’ survey in the article,

What do these firms plan to do to meet these very real needs now?

* I would recommend you read the Lawyers Weekly article, it raises w hole host of additional issues not covered in this post

What are Asia regional in-house lawyers looking for from their outside counsel?

The end of November saw Legal Week (legalweek.com) putting on the second of its Asia regional ‘Corporate Counsel Forum’ events in the Gallery Room of Singapore’s Grand Hyatt hotel. Judging by the impressive collection of 220 regional in-house lawyers who attended, this event is likely now a firm fixture in the diaries of many in the industry. And rightly so. Events of this calibre are few and far between and should not only be welcomed, but encouraged.

Legal Week’s Elizabeth Broomhall wrote up a very succinct account of what took place at the Forum in a post on the Legal Week website on 5 December [2014].

In summarising the day’s events, and following subsequent discussions with Lucy Siebert, international counsel at Australia’s Telstra, and Julia Shtepa, managing director of legal for South Asia at Accenture, Elizabeth’s article highlights the following 5 issues (among more) as issues in-house team in the region have identified as being important to them when selecting outside counsel.

1. Local or International?

It would appear that in-house counsel in Asia are not immune to a discussion that is taking place on a more global level; namely:- should we be hiring local or international law firms?

On the one hand, there are many benefits to hiring an international law firm to act on your matters. On the other, particularly in the mixed legal landscape of Asia (where common and civil law sit side-by-side), there really is no substitute for – as Siebert calls it – “on the ground knowledge”.

I would wholeheartedly agree that there are complex issues in play here, as it is indisputable that there are very clever lawyers working with leading country and regional law firms. That’s why I was particularly drawn to Shtepa’s comment that:

“Sometimes Accenture will engage an international firm to play a ‘deal coaching’ role, she said. “Depending on the regulatory environment and the language constraints, it may be that the deal is led by an international firm and supported by a local firm”.”

If you can afford it, then this seems to me to be a very clever approach to take.

Alternatively, a case could be made that in-house counsel in Asia, as is the case in other parts of the world, look to instruct the lawyer and not the law firm.

2. Panel or no panel?

Client legal panel arrangements are the bane of many a private practice lawyer and their marketing team. Many an hour is spent responding to these and Australia, the home of Telstra, has undoubtedly played a major role in the development of this arrangement. Indeed, many of the ASX 200 have both Australia and Asia legal panels in place. So I was surprised to see Broomhall write that:

“many regional counsel believe these [panels] remain difficult in Asia given the limited capacity foreign law firms have compared with in their home markets, the different practice restrictions on foreign law firms across jurisdictions, the high turnover of partners in the region and the fluidity of the markets.”

While each of these is valid in their own right, none are unique to the region – and certainly would not seem to me to be an impediment to implementing a panel arrangement if the desire was there to do so. No, I would contend that there are two additional factors that mean panel arrangements are not, yet, as prevalent in Asia, which are: (1) relationships still trump all when assigning work; and (2) the rise of procurement is still to come.

That said, as Broomhall herself says: “An increasing number of companies, including Chinese state-owned organisations, have been moving in this direction in a bid to control costs” – and given the number of tender writing jobs that require local/regional language skills (notably Mandarin) that I have seen advertised in the last 3 months, my guess is that this [implementing panel arrangements] will be one of the major growth areas in 2015. Indeed, I will be interested to see what the position on this issue is at the Forum in 2015!

3. Where are all the Alternative Fee Arrangements (AFAs)?

Throughout my time in Asia, law firms have had to be very conscious of their cost-base as clients have always been value drivers. And with annual ROI profit margins of around 20% (which translates to probably the lowest ROI returns in the industry globally), many would say rightly so.

Leaving this aside however, I found myself in total agreement with the comment that when it comes to innovative fee arrangements, Asia lags behind the West.

Actually, with my interest having been spiked in this issue I went online to try and see how many firms had ‘on the ground’ regional Pricing Directors (a role that has seen phenomenal growth in both Europe and America, and less so here in Australia) and I couldn’t find one law firm that had an on the ground head of pricing present in the region.

All of which screams: law firms who can create opportunities to genuinely discuss the value exchange and AFAs with their clients have a massive opportunity to differentiate themselves in what is currently an extremely tight market.

4. Secondments and other value adds

It was interesting to note that both Siebert and Shtepa agreed that “secondments are also an opportunity to add value”.

In my experience, the staffing structure of law firms in Asia – which need to necessarily be tight because of the control on costs – has, historically, not leant itself to law firms offering secondments to corporate clients (historically, as part of a global offering, financial institutions have tended to fair better here).

Clearly, going forward, one of two things will happen: either law firms will need to revisit this discussion, or New Law providers –such as Lawyers on Demand and Riverview Law – are going to find a very nice gap in the market – indeed, many may argue that Advent is already taking advantage of this exact situation.

And law firms who doubt this should note Siebert and Shtepa’s comment that:

“secondments help lawyers in private practice gain a better understanding of their businesses. Indeed, they believe this is the key overall message to get out to firms: get to know our business; understand our drivers.”

and one of the best ways to do that – a secondment.

5. A more diverse profession

I wanted to finish this post on what I consider to be an important note of hope from Siebert’s comment that:

“We [Telstra] specifically look to see that they’re ensuring the best possible talent pool for us – not just white Anglo-Saxon males. We’ve got a very strong diversity policy and so we expect that to be something that is also important to our panel firms.”

If you haven’t already read Elizabeth’s article, I would like to strongly recommend that you wander on over there now…

I know the Burberry brand but that doesn’t mean I buy from them

I know the iconic luxury goods brand ‘Burberry’. Established in 1856, Burberry have been clothing the rich and famous pretty much continuously since. In Sydney they have a flagship store at 343 George Street. Here’s the kicker though: I have never knowingly bought anything from Burberry.

While this may all sound fascinating, you could well be asking yourself about now what this has to do with the selling of legal services? And it wouldn’t be an unreasonable thought too.

So without further ado, let’s move on to the issue at hand.

Last week saw the publication of the Acritas Global Elite Law Firm Brand Index 2014 to much fanfare. As Acritas themselves proclaim, the Index:

“…reveals the firms which are adapting most successfully to the changing market and winning client loyalty and favorability as a result.”

And while this would seem to be a pretty compelling reason to analyse the Index more closely by itself, managingpartner.com goes on to comment, according to the results of the Index, that:

“Multinational clients are more likely to instruct law firms which have a strong multi-jurisdictional presence and capabilities and a collaboratively working style and value focus”.

All I can say is – “Wow!”. If this is truly the case, then it goes without saying that the Index should be considered one of the most important and compelling benchmarks in the industry and it needs to be in the reading list of every managing partner, business development director and head of finance. Because the simple fact is, if my firm isn’t on and near the top of this list, I need to be very concerned.

But, before the panic starts to set in, how is the Index compiled?

Ahh, well here is where it seems to start falling apart. According to the Acritas website,

“The Sharpelegal Global Elite Brand Index is determined through four open-ended questions from the full survey to find out from general counsel:

the first law firms to come to mind

the firms most considered for multi-jurisdictional deals

the firms they feel most favorable towards

the firms most considered for multi-jurisdictional litigation.”

Did you notice that there was/is not a single open-ended question to the effect:

Did you actually buy legal services from this firm?, or
If you bought legal services from this firm, in how many different jurisdictions did you buy them in?, or
Did you use the same firm of lawyers in multiple jurisdictions in one transaction during the course of the last 12 months?

And therein lies the problem with the Index: while it is certainly really nice for my ego that my firm is one of the most recognised legal brands in the world (and just to be clear, I don’t actually work for the firm that came out top in the Index by some margin -Baker & McKenzie), the simple fact is that this doesn’t pay the bills.

Which brings me back to Burberry, a brand I most certainly know, would consider buying from (if I won the lottery), and feel very favourable to, but from whom I’ve never actually purchased anything…

Let’s talk about your law firm’s “collegiate culture”

“Collegiate“:

‘consisting of several colleges or parts’

very formal: ‘sharing ideas and responsibilities with the people you work with, in a friendly way’

– Source: Macmillan Dictionary

Business development professionals, like myself, often talk about the need for businesses to have a “collegiate” culture if the business is to have any real chance of turning a profit. Obviously when we talk about “collegiate” here what we mean is:

“the sharing of ideas and responsibilities with the people you work with in a friendly way”

rather than:

“consisting of several colleges or parts”.

But for business development professionals who operate in the professional services space, the thought of a firm actually having or implementing a “collegiate culture” is more along the lines of a ‘nice to have’, than a reality.

There are lots of reasons why this is so, and to be fair most of them have more to do with the benefits and rewards system that breeds behaviour in law firms than a lack of willingness on the part of any firm to implement this type of culture.

And so it was with great delight that I read earlier this week the CEO of Shoosmiths (Claire Rowe) saying that a collegiate culture was how to keep staff happy and turn a profit.

Imagine, the nirvana of happy staff and making a profit.

Actually, where:

“We have a transparent and open environment, there are no secrets. We have very honest conversations with our people to set our plans. Our staff enjoy a set-up which means they can achieve their personal objectives in a supportive way”

it really isn’t that hard to imagine.

It also shouldn’t be that difficult to implement such an environment.

So it was with equal disappointment that I read the following day, on the same website, how DWF were to “take account of non-billable work in [their] new appraisal model” (my bold for emphasis).

I’m not sure if the management/HR team at DWF are aware quite how polar opposite their publicly stated approach is to that of Shoosmiths. And to be fair to the management of DWF, they may not have been aware when talking to the publisher of the website that the Shoosmiths story was going to be published the day before.

Regardless, the message to young lawyers is clear: At Shoosmiths we believe in transparent and open environment with personal respect; whereas at DWF if you are not billing, we will give you credit for whatever it is you have done, but we are not overly happy about the whole situation!

And it is worth noting that, from an #Auslaw perspective, it is not only the young lawyers who get this message. As far back as September 2010, Bob Santamaria – ANZ Bank General Counsel – stated in the Australian newspaper that:

“Law firms now are being run more as businesses and for profit, and that is affecting lawyers, good and bad”

going on to say:

“There will be very, very good lawyers who are jaundiced by some of that approach that is applying in the big firms.”

In other words, if you can get the foundations of your culture right – and preferably making this a collegiate culture – you are some way to attracting some of the best talent around and, hopefully by extension, some of the best clients.

I happen to agree with Bob Santamaria. Indeed, I will go one step further:

If you can get a collegiate culture going in your firm that has values aligned with those of your client, you will almost certainly be as happy and profitable as Shoosmiths.

So how collegiate is the culture in your law firm?

RWS_01

ps – if you are interested in what a firm’s values might look if they were selected by their client, Cordell Parvin’s “If Your Clients Could Choose Your Law Firm’s Vision and Core Values” is a good starting point

5 steps to take when your client becomes your biggest competitor

One of the more interesting take-outs from an article (‘The Rise of in-house counsel: What does this mean for law firms?‘) published on the Australasian Lawyer website today – on the rise of in-house counsel numbers in #Auslaw – is the following comment by Katherine Sampson – managing director of Mahlab Recruitment:

“It’s not necessarily that they’re [in-house] going to a competitor firm, but they are going in house…”

To me this statement rings alarm bells and reads:

“your client has just become your biggest competitor!”

So, what steps should you be taking when your client has also just become your biggest competitor for that work?

Here are 5 things you should be putting in place immediately:

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