Management Memo: 6 Ways to Boost Global Proficiency Now

, The Am Law Daily

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There are few actions your firm could take this year that could provide greater benefits than learning to speak “international” to your clients. When your lawyers and staff master this skill, your many clients with interests and activities beyond the U.S. will see you as capable of advising on work you don’t even hear about today.

Your firm need not have offices in umpteen countries to gain significant fee income from internationally active U.S.–based businesses, as well as from foreign companies investing in this country. Indeed, many of your middle-market clients are already getting an increasing share of their revenue from international sources even though they have established little or no presence abroad. Why can’t your firm do the same?

Speaking “international,” of course, does not involve learning a new language. Rather, it is a way of looking at your client’s particular circumstances that reflects an understanding of how the interplay of domestic legal, business and government issues translates overseas. Your firm will speak “international” successfully when your lawyers are able to show that they know something about advising clients active in certain target countries or regions.

Most midsize firms speak “regional” or “national.” Some firms aren’t even that fluent; they speak only “New York” or “Texas.” If your firm is one of these, what clients hear is an absence of the know-how, experience or relationships required to serve the interests that drive their business today. They may decide your firm is less aligned with their internationally active company and off-piste with regard to their growth trajectory. It’s nothing personal. Your firm may be a fine one that is adept at providing certain types of advice. But your lawyers will be ruled out for a wide swath of work that those clients regularly give to firms that speak “international.”

Why are your lawyers being ruled out? Since 2004 I’ve asked more than 2,000 corporate clients how they select the law firms to which they give their work. These clients have consistently explained that a first step is deciding if the issue calls for an international law firm or a domestic firm. For a state-specific issue, or if local connections or special expertise are required, the client looks for a domestic firm. For a complex matter crossing a few practices or jurisdictions, where coordination is important, the client looks for a firm that it perceives as global—usually even for the strictly U.S. piece of the transaction.

The problem for law firms positioned as national or regional is that increasingly international middle-market and larger clients won’t come to you with matters that your lawyers may have the requisite prior experience to handle. Since your interactions with these clients have typically focused on issues close to home, they will simply assume you don’t have the orientation or skill set they want. As a result, your lawyers will lose a lot of work that they don’t even know exists because the client never mentions it.

Some midsize, national law firms are alive to this need. They have invested the time and energy necessary to understand the international needs of their top client relationships, developed an awareness of international issues through training, increased their expertise in key practices, and established relationships with law firms overseas. Several of these firms now get as much as 20 percent or more of their revenue from international work—and don’t have a single office outside the U.S. Midsize law firms in the U.K. have become particularly good at generating international fee income because their domestic market is small.

Unfortunately, a great number of midsize U.S. firms still behave as if their territory stops at the nation's borders. Lawyers at these firms assume it’s enough for them to follow international news and know what the BRIC countries are. In 2014, that’s a weak defense against the international firms doing business in your backyard.

Midsize firm leaders have long shrugged off competition from global law firms, in part by arguing that the fees these firms charge are too high to pose a threat locally. That defense is weakening, given the encroachment of so-called megafirms such as Dentons, DLA Piper and Norton Rose Fulbright. Many of these global firms’ local offices have strong middle-market practices and a good regional clientele. What’s dangerous is that in the last few years most of them have gained greater pricing flexibility than smaller domestic firms, because they have developed their own low-cost options that leverage economies of scale.

By speaking “international,” midsize U.S. firms can boost their bottom line, add interesting projects and opportunities for talented lawyers, and serve a greater share of their clients’ legal services needs. It’s not about trying to be something you’re not; the aim is not to become a global firm with scores of lawyers overseas. But why cut your firm out of the benefits of globalization?

Here are six initial ways to build your international proficiency in 2014:

1. Identify the key practices and industries at your firm where growth and opportunity outside the U.S. is greatest, and learn the international dynamics at work in those areas. Practice members need to know the locations of key markets, the major legal/business risks in the countries involved and which legal services are in the greatest demand. For a commercial practice, for example, you should know the five or six fastest-growing retail markets in the world, be able to find them on a map and know a few of main legal challenges facing your clients in those places.

2. One major effect of globalization is that far more transactions and projects now originate outside the U.S.—many of them involving Western companies. If your firm aims to have a market-leading practice in energy, finance, corporate, financial services or real estate, you need to know something about the vital legal work being done in these areas in other parts of the world. Armed with this information, you can greatly improve your business development strategies and marketing tactics. Many lawyers may have the knowledge already, but are not communicating it to clients with any consistency.

3. Gather information on the foreign activities and interests of your top 50 or 100 clients. Ask about their fastest-growing markets worldwide and what they’re doing in those markets. You are likely to learn that international aptitude is required in several other practices, such as IP, dispute resolution, white-collar crime and data privacy. You can build that capability around client needs.

4. Your firm’s practice descriptions, case examples, proposal content and expertise data is likely to need editing in order to highlight international experience and demonstrate global savvy. Make this job more feasible by starting with the practices in which you have the most to gain or lose.

5. Your lawyers need to be aware of regulation and enforcement trends overseas that may affect your corporate clients, particularly in heavily regulated industries. Regulators constantly exchange information across agencies and countries, so issues spread quickly. Understanding federal or state laws alone is not enough for clients with interests in China or Africa that need to ensure compliance across all of the countries where they do business. They want their advisers to show a basic understanding of arbitration options and risks in China, for example, or recent anticompetition fines in Europe. Many midsize U.S. firms offer isolated regulatory advice, which can be dangerous for internationally active clients.

6. To win business today, your firm’s workforce must accept globalization’s effect on business relationships. Since corporate executives and shareholders are increasingly multiethnic, your own people also need to be more culturally diverse. Celebrate the languages spoken and international backgrounds of lawyers and staffers. Encourage and support attorneys’ connections in select countries. Tailor proposals and pitch teams to avoid cross-cultural faux pas with clients whose native tongue is not English and whose business approaches may be worlds away from yours.

E. Leigh Dance, who works out of New York and Brussels, is president of management consultancy ELD International LLC and directs the Global Counsel Leaders Circle.
 

 

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