Tag Archives: Chambers Client Report

The New Scramble For Markets

Published in Chambers Client Report, Autumn 2008

Client Report’s first Emerging Markets Survey reveals the progress being made by the world’s leading law firms – and the secrets to survival

For Rick Burdick, head of international corporate transactions at Akin Gump, 2008 got off to a bad start. On 1st January, he learnt that his firm’s Dubai office – its sole Middle East base – was moving to Dewey & LeBoeuf. “It was not how we envisioned our Middle East practice developing,” he deadpans. Instead of trying to rebuild the office, Akin Gump abandoned Dubai altogether, opening instead in Abu Dhabi a few months later.

The Washington, DC firm is not alone in its misfortune. These are not easy markets in which to thrive – or even survive. Client Report asked leading practitioners in the most exciting emerging markets about the keys to success on this frontier of law.

A gold rush?

Of the 36 firms who responded to our survey, 24 have opened a new office in at least one of our four main jurisdictions – Brazil, China, Russia and the UAE – since 2005. With the slowdown in Western corporate activity, these markets have become even more attractive. Some firms have a clear-eyed plan to establish themselves in response to client needs. Others, as one practitioner in Dubai put it, “think they can dump their under-utilised associates here and they’ll
magically pick up work.”

In fact, building a presence in these markets is difficult and demanding. On pages 38-50, we look at each jurisdiction in detail. Certain challenges, we found, are common across emerging markets.

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The Sector Specialisation Survey

Published in Chambers Client Report, Summer 2008

Lawyers nowadays claim to specialise in particular industries almost as often as in particular practice areas. But are firms really taking this strategy seriously? And what are the risks – and rewards – of industry specialisms?

A wag once said that a specialist is “someone who knows more and more about less and less.” The law firms who responded to our Sector Specialisation Survey would beg to differ. All but two of the 55 responding firms claim to have implemented a strategy of industry specialisation, bringing lawyers together across practice areas to focus on
particular client industries.

It’s a recent occurrence. As table 2 shows, most firms have introduced formalised industry sectors only in the last five years. “A fair few firms tried this approach in the 1990s, but didn’t get much traction, because often the investment wasn’t there,” comments consultant David Temporal, of Temporal Tanja Consulting. “But gradually, people have begun to realise this is a way for firms to differentiate themselves in an increasingly crowded marketplace.” The downturn of the early 2000s, which forced many firms to think about their place in the market, surely helped spur the spread of the practice.

So with the majority of the UK’s leading law firms pursuing this approach, who is taking it seriously and who is just, as one observer puts it, “paying lip service to the idea?” And with the market rushing to implement this strategy, are there any risks firms should be aware of?

‘Clients see the world through an industry perspective’

The most common reason cited by firms for pursuing a sector approach is that modern clients demand detailed industry knowledge. “Clients see the world through an industry, rather than a practice area perspective,” points out Michael Frawley, UK managing partner of Taylor Wessing. “We need to see the legal landscape through our clients’ eyes.” Firms mentioned a host of areas where industry knowledge can be of use, from identifying potential future opportunities to understanding clients’ reasons for engaging in a transaction.

Of course, not all clients want their lawyers to be all-round business advisers. But deep sector knowledge can help a firm deal with purely legal instructions, too. “Some clients do say, I’m the businessman, you’re the lawyer, just stick to the law, and leave the commercial decisions to me,” admits Howard Morris, chief executive of Denton Wilde Sapte. “But those same clients may run out of patience very quickly if their lawyers don’t understand the reasons why they want to do a deal or handle a case a certain way.” As a result, clients have become more and more expectant of deep industry expertise from their law firms: one firm estimated that 80% of their clients prefer this approach.

Of course, with knowledge comes opportunity. A proper understanding of a client’s industry can help firms identify potential work to pitch for. The aim, as one firm neatly put it, is to know “what are the six things that keep CEOs in this industry awake at night? And how can we help them sleep better?”

In addition, several firms noted, detailed industry knowledge provides a useful opportunity for differentiation in a crowded marketplace. It’s a particularly attractive proposition for the large City firms that have struggled in recent years to carve out a space in the market between the magic circle and the often-cheaper nationals.

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Energy: special report

Published in Chambers Client Report, Spring 2008

The precipitous rise in the price of oil has meant a bumper crop of activity for energy lawyers. Back in 2005, when Client Report last looked at the energy industry indepth, the world was just adjusting to the age of the $60 barrel, and one industry general counsel admitted he’d “never been busier.” Since then the activity levels in the industry – and the workload for its lawyers – have increased. Our feature on page 70 looks at the opportunities, and challenges, the current high levels of activity present for energy lawyers.

Although the oil industry is celebrating, though, fossil fuels have never been so unfashionable. Massive government support means a boom in renewables and new business opportunities all over Europe. Our feature on page 84 offers an introduction.

At the same time, the European electricity and gas markets face upheaval thanks to the EU’s plans to break up its power station-to-plug-socket utility giants. But the utilities – and the governments that support them – aren’t giving up without a fight. Our feature on page 94 has the details.

In addition, partners in five leading energy firms from across Europe offer their perspective on the latest issues in energy in their jurisdictions.

Read the report…

Walking the line: Lovells' battle to balance collegiality with competitiveness

Published in Chambers Client Report, Spring 2008

How can law firms raise their standards and profits without sacrificing their partnership culture? Renowned for its friendliness but prone to financial underperformance, Lovells has battled to strike the balance.

One challenge is common to all ambitious law firms: to raise profits and stay competitive while retaining collegiality and their own distinct partnership culture. It is a high-stakes game. Take too much pride in a partnership approach, and a firm can struggle to deal with underperforming partners. High-billing star partners will soon head for the exit. But push too hard for increased performance, and you risk destroying the very working environment that retains talented people.

The recent troubles at Heller Ehrman, the medium-sized California firm, illustrate the risks. The firm was known and admired for its partnership spirit. But – determined to retain and attract big-billing rainmakers – the firm demoted several partners in non-core areas, and adjusted its compensation to a more eat-what-you- kill model. Rather than attracting big names, though, the firm has lost several well-regarded partners who felt the new model undermined the firm’s egalitarian culture. As one former partner said: “Now that they have made money [their] number-one [priority], I don’t know why they are surprised when people leave to make more money.” Only the tiny handful of firms which can offer more earnings than anyone else can afford to sacrifice culture for performance.

Equally, though, history is filled with once-stellar firms who have slipped into the mid-market as a result of a cosy culture. Stephenson Harwood, once a member of the UK’s elite group of nine, now languishes in the London mid-market. Of course, if a firm is happy to enjoy a relaxed culture at the expense of its position in the market, fair enough. But such a firm can hardly be surprised if it struggles to attract talented young lawyers. Stephenson Harwood has woken up to this, and has run a tighter ship in recent years.

For most large firms, the answer lies in finding the right balance between these two extremes. Perhaps no UK firm has faced this challenge more acutely than Lovells.

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What does the sub-prime mortgage crisis mean for lawyers?

Published in Chambers Client Report, Spring 2008

Litigators anticipating a wave of disputes triggered by the sub-prime crisis may be disappointed, while finance lawyers could face difficult questions from clients.

The sub-prime mortgage crisis has been, for the most part, bad news for lawyers – along with everyone else. Clifford Chance and Cadwalader, Wickersham & Taft are two of the firms that have made structured finance associates redundant in recent months as the market for mortgage-backed securities and collateralised debt obligations has collapsed. And the ensuing credit crunch has all but frozen financing and M&A work, leaving non-contentious departments scouring the world’s emerging markets for work.

Litigators, however, have been looking forward to a wave of major, complex bank-on-bank litigation as the catalogue of bad offering and investment decisions that led to the sub-prime crisis falls out. Norton Rose, CMS Cameron McKenna, Eversheds and Herbert Smith have all restructured their dispute resolution departments in recent months to focus on financial institutions. The US firm Quinn Emmanuel, which specialises in suing banks, is planning a London launch in the next few months, and
another US firm, Fulbright & Jaworski, has snared away partner Melanie Ryan – currently specialising in sub-prime litigation – from Barlow Lyde & Gilbert to join a dedicated sub-prime practice with more than 100 lawyers worldwide. “A lot of highly structured sub-prime backed transactions are being looked at extremely closely right now,” says Ryan. In January, The Times reported that the litigation wave stemming from the crisis could be bigger than that which followed the Enron crisis. It predicted that the major investment and retail banks at the centre of the crisis would take each other on in mammoth disputes.

And yet, almost a year after the sub-prime mortgage crisis broke, the expected wave of
major litigation has yet to appear. The banks have held their fire, and commercial litigators on both sides of the Atlantic are still waiting for the gold rush. “What’s been going on so far has been a lot of what I call hand-holding,” says Matthew Newick, a specialist in financial institutions disputes at Clifford Chance. “Helping clients develop strategies for managing risks; advising them on what the documents mean; and there’s some pre-dispute rattling of cages, so we’re helping people through that. But very little that’s blown into a full dispute is related directly to the sub-prime crisis.”

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