While world events may have caused a retrenchment from globalization over the past year, they have only made law firms with a global perspective all the more in demand.
Even as billable hours are receding, clients are increasingly desperate for guidance around changing international regulatory frameworks and their best path to global success. As law firms try to meet these needs, they themselves are facing an intense patchwork of geopolitical pressures that make operating in multiple jurisdictions a delicate balancing act.
Jennifer Leonard, a professor at University of Pennsylvania Carey Law School who researches the future of the practice of law, says some of the biggest issues global law firms now face are complexity around data privacy, the disintegration of borders and the challenges of adapting to a world where environmental and social issues have come to the fore.
“Law firms face the same challenges that their clients face,” Leonard says. “They’re dealing with an ever-changing world where ESG, corporate governance and social justice are an increasing part of the corporate conversation.”
Added to that complexity is the need to respond and formulate strategy as a legal organization full of lawyers who take different positions.
“You’re working in a business model where your people might be under the same brand and umbrella, but essentially every partner has their own business, and every partner has their own perspective on any given topic,” says Leonard.
However, when compared with firms that operate on a purely local or regional basis, Leonard believes global firms might actually have a leg up on managing the issues of the day.
“A global firm has the resources to hire a team of people to run their diversity efforts, run their marketing efforts, or to take up a corporate social responsibility role. They also have a much greater view of any given situation or challenge,” Leonard says. “Regional firms don’t often have that capacity. They’re limited in their resources yet competing with these global powerhouses.”
Different Things to Different Stakeholders
Managing a global firm means balancing the needs of clients, talent, local regulators and, increasingly, the general public. And each of those constituencies is looking to get something different out of that global platform.
For clients, it’s not always about the physical presence.
Frank Ryan, DLA Piper’s global co-chair, says being a global firm is all about perspective: “Are you a globalist or are you not in the way you perceive the delivery of legal services?”
A global firm’s bench could run to several thousand in offices all over the world—like DLA Piper with 100 offices. Or it could be just dozens of lawyers with only one international office. In Ryan’s eyes, what’s more important is world view—and building services accordingly.
“Clients don’t care what practice group or geography you’re sitting in. They want to know that you have the expertise they need to help them drive their initiatives forward,” says Ryan, adding this is where firm culture and a globalist perspective comes into play.
Without that outlook, no amount of talent, sophistication or head count can deliver what global clients need, Ryan says. But the converse is also true; if all your lawyers have a global perspective, then head count and geographic spread doesn’t need to be world-encompassing. It just needs to match client needs.
When law firms position themselves as global, they need to deliver “at a very high” level, Ryan notes: “You don’t stay in the global game for very long if you don’t.”
Client expectations may differ from country to country. The regulation of the practice of law itself can be extremely different from jurisdiction to jurisdiction. Quite simply, there is more to manage, and more inherent risk to the operation.
“If you look at it from the scale and size angle—yes, it gets more complicated,” Ryan admits. “But if you look at it from a client perspective—what do we need to have to serve clients in their sectors—a lot of the size and scale complexity falls away.”
Managing the firm’s culture has implications for all of a firm’s stakeholders and global firm leaders spend a lot of time focused on providing that consistent experience for clients and talent alike. It isn’t always easy.
“We want to keep our people united, not divided,” says Hogan Lovells CEO Miguel Zaldivar. ”We need to be inclusive and enable people that have different views to feel that they belong. That’s part of our commitment to diversity and inclusion.”
Yet in a world where geopolitical and social issues increasingly become lightning rods for polarization, global law firm leaders admit maintaining a consistent firm culture of inclusivity can become challenging.
People should not need to compromise their values to work at the firm, says Zaldivar, adding, “We have to be very, very clear that we’re lawyers. We provide international legal advice. We’re not politicians. We’re not social activists working to advance the agenda of any particular government or group. We’re not here to judge social positions. But at the same time, we have to demonstrate a purpose. The people in the organization need to get a sense that we care about society. It’s not all about being a productive business and reporting great profit per equity partner. Working to get that balance right is hard.”
To that end, Zaldivar says being global should not mean managing from top to bottom.
“You can’t have people telling others in other countries how to do things. You have to transfer power to people, and give them the freedom to operate within parameters,” he says.
Everybody knows what their values are. Everybody knows what the rules are. Everybody knows the strategy, but “you don’t constrain them and tell them what to do. You just tell them, ‘These are the rules. You’re accountable for performance in terms of quality and economic achievement, but let’s do it your way.’ And then get them to execute their strategy for the relevant market. That’s a very different approach from dictating everything from overseas.”
Yet there are also added risks that have nothing to do with the practice of law. With a global footprint comes increased geopolitical risk.
Only a year ago, firms operating in the Russian market never would have contemplated pulling out. Yet weeks after Russia invaded Ukraine, operating an international law firm in Moscow became not only prohibited under sanctions, it also became a risk for foreign and local lawyers alike. Foreign law firms operating in China have for decades needed to balance profit with political risk.
DLA Piper’s Ryan says the risk profile for a global law firm is significantly different to firms that are geographically less diverse.
“Are there additional geopolitical risks? I think there are. But I don’t think they’re any different than any multinational company that does business in all these places,” Ryan says. “You need to be thoughtful and mindful of the new risks, but that doesn’t alter our belief in being globalist.”
With the stress and pressure of global risks comes opportunity as well, Ryan notes: “There is a greater emphasis in regulation. There’s greater challenges when politics impacts legal considerations. That also provides more opportunity for a global firm—our firm isn’t designed to do the easy stuff. It’s designed to work on the meaty, complex issues.”
Structuring to Meet Global Needs
Mary K. Young, a consultant with the Zeughauser Group, says to be successful on a global stage, law firms need a clear strategy around what type of clients they want, and what kind of markets they are serving.
“Being global means being able to serve clients in the markets where they need to be served,” Young notes. “My entire motto around global firms is that if you’re going to be global, you should do it because you want to provide seamless service to your clients around the globe.”
And that doesn’t necessarily mean having to be all things to everyone, says Young.
Firms can still be global by just doing M&A. Or government investigations. Or tax.
“These practice areas need global services and a global perspective in multiple jurisdictions, but they don’t necessarily need big teams all over the world,” says Young. “They need people who understand all of the different local law, but they need to have a global perspective too.”
To meet the challenges Young and Penn’s Leonard outline, and to promote its services as seamless and global, Zaldivar says the firm is structurally set up to encourage cross-border and cross-practice collaboration between its lawyers.
“We don’t have any internal incentives to compete with each other. It’s not about making the money in a particular country or a particular practice group. It’s about working together as one,” Zaldivar says, adding that the firm’s compensation system is not based on the performance of a single office, region or practice group. “We don’t compensate people based on the success of a silo. We compensate people based on the success of the firm.”
The firm also focuses on global marketing sectors with global leaders—for instance, it has a single global head of litigation.
“These leaders push the work across all sectors, markets and practices,” says Zaldivar. “For this reason, our clients consistently come to us when a matter is complex and touches multiple jurisdictions—that’s our sweet spot.”
Yet Zaldivar admits this isn’t always easy. He said Hogan Lovells “works very hard” to develop relationships with clients that are “sophisticated global operators” who “welcome a uniform and fully integrated approach.”
There is a tension, says Zaldivar, between being global and not becoming too local in any one jurisdiction. Hogan Lovells solves this by being selective about what type of clients it targets.
“We want the very high end of the work, and we can serve it that from our existing footprint,” he says.
For Joe Andrew, the global chair of Dentons, being global is about providing the mix of practices that matter to clients, no matter where they are in the world. M&A may be “day one,” he says, but the other 364 days of the year are regulations, investigations, employment, tax and everything else.
“If you’re looking for front-page news, it’s who’s representing who when it comes to M&A deals. But that is a minuscule part of legal spend around the globe,” Andrew says. “The big legal spend is everything else.”
Whether a law firm is global, regional or local, one thing seems apparent. No matter your size or geography, clients are increasingly looking for a global service. While a challenge for smaller firms, the challenge is not insurmountable. What is key to success is having a global perspective.