Over dinner with a Korea-based former colleague and friend, the discussion turned to the news of law firm expansion, including the latest on DLA Piper Rudnick, and collapse, Coudert Brothers in particular. What is really driving the belief among some that they must build mammoth multi-country law firms in order to survive and prosper?
The largest companies typically have a team of experienced in-house cross-border lawyers who structure, draft and negotiate deals. Much of the work is handled by the in-house lawyers, though with on-the-ground back-up support from local lawyers in the target country. While the local office of a multinational law firm may be turned to, more often projects are executed by one or two in-house lawyers in one country working with a local lawyer in one of the many excellent local law firms in the target country.
Multinational law firms have their place, such as for the kind of very large multi-country M&A, project finance or securities projects that can benefit from some added element of coordination and control among several offices simultaneously. (An in-house colleague in a major Chicago-area company recently had just this sort of a multi-country firm need for the sale of a business unit with assets in more than a dozen countries.) Yet, what is truly added by a multi-country firm for the day-to-day joint ventures, manufacturing agreements, licenses and agancy/distribution arrangements between one country and another?
The largest law firms tend to feed the beast by seeking-out and emphasizing the largest and most expensive kinds of projects for the largest companies. While the day-to-day cross-border projects will not be turned away, these types of projects may not get the kind of senior attention and care unless they are part of a broader relationship or seen as feeders for larger and more lucrative assignments.
It is true that some companies just want to get a project done and are not particularly cost-sensitive in how a project is executed. There may be some comfort taken in having a very large firm with many offices tend to needs large and small. Some companies take such a route because they are inexperienced and do not have the internal resources for a hands-on role in cross-border legal matters, including for working with local counsel in target countries. Yet, others are simply not aware of their options and may over-value size and the existence of foreign offices. Such a perception is not discouraged by the largest firms who are investing substantial marketing resources in attempts to become the next one-stop shop for worldwide legal needs.