Globally confused – it's a winding road to legal globalisation
Numbers, oddly, equal emotion. One of the first things you learn in business reporting is that the seemingly scientific world of figures often comes down to all-too human feelings of ambition, fear, frustration, greed and pride. Take the Global 100 – or, for that matter, all leagues of law firm performance – beauty and ugliness remain in the eye of the beholder. Law firm leaders look into that mirror of metrics and see hugely contradictory reflections that back the strategic decisions they have bet their careers on.
October 18, 2012 at 07:03 PM
3 minute read
Numbers, oddly, equal emotion. One of the first things you learn in business reporting is that the seemingly scientific world of figures often comes down to all-too human feelings of ambition, fear, frustration, greed and pride. Take the Global 100 – or, for that matter, all leagues of law firm performance – beauty and ugliness remain in the eye of the beholder. Law firm leaders look into that mirror of metrics and see hugely contradictory reflections that back the strategic decisions they have bet their careers on.
Yet the more I look at such leagues the less certain I am that they prove or disprove the value of any particular strategy; the last 10 years have seen plenty of Global 25 firms prove to be indifferent performers on a range of measures.
That is not to come out against the rise of the global law firm. Legal globalisation is a demonstrable fact. The buying decisions of major corporates obviously give some support to the emergence of international law firms. And going global has inarguable advantages. Firms gain scale, reduce their natural competitors – a factor that has propped up some huge law firms during periods of strategic difficulty – and gain more flexibility to shift with the vagaries of the world's economy. There is also clearly a level of brand premium that comes with size.
But it remains more complicated than a straight march to world domination. Going global can achieve many things but it can't counter fundamental weaknesses in a firm's practice or governance. Actually, it can compound such flaws since logistical and leadership challenges grow with scale.
Some verein-based firms have good prospects – others less so. Either way, there will come a time, when such firms have moved past the warm glow of being mentioned in the same breath as more storied rivals, when they will have to learn to live with the realities of competing with fully integrated rivals on quality, not just mass.
At the other end of the spectrum, I'm not much convinced by the hyper-profitable outfits that put their success down to a dogmatic focus on a particular business model rather than being really, really good at what they do. When business model becomes ideology you eventually run into problems when inflexible belief conflicts with a world that refuses to stay the same. However much they protest, Wall Street's boutiques are losing influence; how many Wachtell-style outliers does the industry need?
Going global makes sense for a lot of firms for blindingly obvious reasons. But the legal industry too often attributes success to business models that make only moderate contributions to their actual performance. In the end, no matter how global the legal market becomes, I suspect many firms still don't understand their own businesses, no matter what the numbers say.
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