The effects of globalization of legal markets pose a unique set of risks and opportunities for independent law firms in Asia.
Asian firms with a single-market focus (i.e., active in only one country) are especially vulnerable to increased competitive pressure from international combinations with strong Asia-Pacific roots, such as King & Wood Mallesons / SJ Berwin, and from the global giants, such as Freshfields Bruckhaus Deringer, some of whom now might already realize more fee revenue from Asia than from their "home" markets.
This brief article outlines seven observations of Walker Clark LLC members, some of whom have more than 15 years experience advising Asian law firms on strategic and operational matters.
We offer these general observations.
- Globalization of Asian legal markets has been a substantial competitive threat to even the best national law firms in Asia. On balance, however, our experience advising law firms (both in Asia and elsewhere concerning their "Asia strategies") strongly suggest that for well-managed, progressive law firms, the opportunities far outweigh the risks. As the partner in one Korean law firm told me recently, "The competition from foreign firms has made us better in almost every respect."
- Referrals from, and collaboration with, foreign law firms is an obvious benefit, which most national law firms with good local reputations can achieve. However, good independent law firms can also compete directly against some of the largest and most powerful foreign firms for at least some of the best high-value legal work.
- This requires a well-informed strategy, however, and not just opportunism. It also demands planning now. If you wait until the opportunity arises to figure out how to respond, it will be too late. Your competitors, both foreign and local, will have passed you by.
- Innovation in the delivery of client services can level the playing field in the competition for the best legal work in Asia. Past success means little in this environment. Size is not always an advantage. Smaller firms can be especially good at innovation -- in some instances better than their larger competitors. It is easier to turn a speedboat than an oil tanker.
- In the Asian legal markets, as in emerging and recently-emerged legal markets in other parts of the world, an understanding of how to manage profound change in highly competitive professional services environments (both inside the firm and out in the market) is one of the most important conditions for continued success.
- Branding and the creation of competitive advantage often must take significantly different directions in Asian legal markets. The traditional Western concept of "the brand" does not always travel well. Clarity of communications, the depth of networking (rather than just the breadth of it), and consistent client service qualilty sometimes may be more critical to the marketing of an independent Asian law firm than to a larger international firm. In other words, a global law firm usually can get away with ineffective marketing communications and indifferent client relations practices; but those can be fatal to the aspirations of a smaller firm tryiing to compete for high-value work.
- Finally, national independent law firms in Asia should not try to copy "best practices" and models from Western Europe or North America. In our experience, most of those structures do not fit very well into the dynamics of legal markets like those in Asia. Instead, for a list of reasons too long to discuss in this blog article, Asian firms frequently can obtain more relevant insight and guidance from the experiences of successful independent firms in Latin America and, more recently, in central and eastern Europe. Even these "emerging markets" models need to be sent through the intellectual filters of the current state and future potential of an Asian firm's market (or markets); however, in our experience, other emerging or recently-emerged legal markets are more reliable starting points.
Walker Clark LLC advises Asian law firms seeking to improve their strategic position, performance, and profitability, as well as firms from outside the region that are considering an "Asia strategy." Walker Clark members have advised more small and mid-size law firms in more emerging markets worldwide than any other legal management or marketing consultancy. For more information please contact the author by e-mail or by telephone to one of the numbers listed at the bottom of this page.