COMMENTARY: What Makes a Global Firm?

Recently, Vault.com eliminated its rankings for international firms because, its editors said, the staff couldn't agree on what an 'international law firm' really was. The American Lawyer has similarly struggled with the definition in its rankings. Frankly, we can understand the confusion ' these days, nearly every major firm says it's 'international.' But establishing an overseas office or two, or having a few multinational clients, is far from being truly global. This is especially true in China, where firms want to say they have a presence.

What, then, makes for a successful global law firm model? From our perspective, it's: Providing clients with local, U.S. and English law capabilities in the jurisdictions where we work; maintaining a strong presence in the world's major financial centers; moving into emerging markets early; and ensuring constant collaboration and a steady work flow among offices. It's not only regularly helping clients negotiate cross-border rules but utilizing such laws to find better solutions.

Local Capabilities, Worldwide Reach

Being global means having partners who are trained and licensed to practice in the jurisdictions in which they are located as permitted, as well as having lawyers trained in U.S. or English law as cross-border transactions and litigation increasingly draw on those rules. And it means having an in-depth understanding of those markets that is not only better than that of your competitors but also as good or better than homegrown firms in that locale.

Being global also means having a significant presence in major financial centers such as New York and London, as that is where the world comes to do business, and why U.S. and English law capabilities are so important. By building strong anchor offices in New York, London, Tokyo and Frankfurt, we can stay ahead of market trends and weather fluctuations.

Arrive Early

Being international is also defined by how you approach new markets. Experience has taught us to enter new markets even before they have matured to forge lasting relationship and capitalize on emerging opportunities.

For example, dozens of firms are now clamoring to break into the China market, but those that are just arriving may find it difficult since the buzz has become a swarm. Why should a client hire a firm new to the marketplace when the early arrivals already know how business is done? We opened our Hong Kong office in 1978, long before the Crown Colony reverted to Chinese control and just as the economic reforms on the mainland were beginning to hatch. Working patiently from that base, we were poised to open in Shanghai in 2001 and in Beijing 3 years later. This organic approach allowed us not only to take advantage of foreign investment coming into the country but also to respond to what our Chinese clients told us that they needed: counsel on making investments abroad, particularly elsewhere in Asia. This approach clearly works: We just advised on China's first LBO.

Another example: After the fall of the Iron Curtain, we responded to Eastern Europe's pressing need for diversified legal services by opening offices in the Czech Republic, Hungary, Poland and Russia in 1990. These emerging nations needed to privatize many state-owned entities, such as airports and utilities. Sixteen years later, Eastern European states have joined the larger EU community, and those markets regularly keep us busy with everything from M&A transactions and IPOs to negotiating outsourcing contracts to litigation and arbitration matters.

International Exchange

International work at many large firms is primarily generated at the firm's home office and then trickles down to the various local offices. At global firms, business development opportunities flow in all directions, where, say, a local M&A matter being handled in Hamburg may turn into a wider opportunity for financing work in London or arbitration lawyers in Paris or Washington. Or if a large UK bank needs assistance with a capital markets matter in Turkey, we draw on both our London and Istanbul lawyers to seamlessly handle all aspects of the deal. Indeed, roughly three quarters of our major clients rely on 10 or more of our offices to handle their global legal needs.

More important than where client work originates is the ability to transfer successful models to new jurisdictions. We drew on our past work developing toll road projects in Latin America, where public-private partnerships have been used successfully for decades, to help a Spanish client undertake an innovative refinancing of the Chicago Skyway toll road. This was not only one of the United States' first privatized toll roads but also one of the first to employ a combination of insured bonds and derivative instruments.

Solving Cross-Border Conflicts

Increasingly, clients require assistance with matters that no longer neatly fall within a single jurisdiction. Ten years ago, only one agency ' the U.S. Department of Justice's Antitrust Division ' hunted for global cartels. Now that agency is joined in its efforts by enforcement authorities in more than 20 nations and, of course, the European Union. Twenty-five years ago, only the United States and a few European countries had any merger clearance regulations; in recent years that number has grown to nearly 70.

Understanding such cross-border issues really came into play when a client in the liquor business wanted to sell its highly successful vodka brand to a large spirits corporation for more than $2 billion. The deal closed in New York and Paris simultaneously and was structured as an asset deal with two main sellers with assets spread across a dozen countries. Completing it successfully required that the various contractual relationships simultaneously clear all the legal hurdles in multiple jurisdictions and that none of the acquisition terms conflicted with rules in any of those jurisdictions.

Deep knowledge of cross-border rules also helps clients resolve matters more efficiently. In advising a large paper company in Mexico on its $800 million restructuring, we successfully tested the strengths of Mexico-U.S. insolvency rules by filing an ancillary proceeding in the United States Bankruptcy Court for the Southern District of New York, resulting in the court permanently enjoining creditors from challenging the Mexican company's restructuring in the United States. This marked the first time that a U.S. bankruptcy court has recognized and extended comity to a Mexican court order confirming a reorganization plan under Mexico's Business Reorganization Act.

For law firms really seeking to impart value to clients from a global model, it takes far more than a label of 'international' or a few overseas offices. Done right, the benefit to clients is unparalleled and offers firms myriad opportunities to constantly renew themselves.

Recently, Vault.com eliminated its rankings for international firms because, its editors said, the staff couldn't agree on what an 'international law firm' really was. The American Lawyer has similarly struggled with the definition in its rankings. Frankly, we can understand the confusion ' these days, nearly every major firm says it's 'international.' But establishing an overseas office or two, or having a few multinational clients, is far from being truly global. This is especially true in China, where firms want to say they have a presence.

What, then, makes for a successful global law firm model? From our perspective, it's: Providing clients with local, U.S. and English law capabilities in the jurisdictions where we work; maintaining a strong presence in the world's major financial centers; moving into emerging markets early; and ensuring constant collaboration and a steady work flow among offices. It's not only regularly helping clients negotiate cross-border rules but utilizing such laws to find better solutions.

Local Capabilities, Worldwide Reach

Being global means having partners who are trained and licensed to practice in the jurisdictions in which they are located as permitted, as well as having lawyers trained in U.S. or English law as cross-border transactions and litigation increasingly draw on those rules. And it means having an in-depth understanding of those markets that is not only better than that of your competitors but also as good or better than homegrown firms in that locale.

Being global also means having a significant presence in major financial centers such as New York and London, as that is where the world comes to do business, and why U.S. and English law capabilities are so important. By building strong anchor offices in New York, London, Tokyo and Frankfurt, we can stay ahead of market trends and weather fluctuations.

Arrive Early

Being international is also defined by how you approach new markets. Experience has taught us to enter new markets even before they have matured to forge lasting relationship and capitalize on emerging opportunities.

For example, dozens of firms are now clamoring to break into the China market, but those that are just arriving may find it difficult since the buzz has become a swarm. Why should a client hire a firm new to the marketplace when the early arrivals already know how business is done? We opened our Hong Kong office in 1978, long before the Crown Colony reverted to Chinese control and just as the economic reforms on the mainland were beginning to hatch. Working patiently from that base, we were poised to open in Shanghai in 2001 and in Beijing 3 years later. This organic approach allowed us not only to take advantage of foreign investment coming into the country but also to respond to what our Chinese clients told us that they needed: counsel on making investments abroad, particularly elsewhere in Asia. This approach clearly works: We just advised on China's first LBO.

Another example: After the fall of the Iron Curtain, we responded to Eastern Europe's pressing need for diversified legal services by opening offices in the Czech Republic, Hungary, Poland and Russia in 1990. These emerging nations needed to privatize many state-owned entities, such as airports and utilities. Sixteen years later, Eastern European states have joined the larger EU community, and those markets regularly keep us busy with everything from M&A transactions and IPOs to negotiating outsourcing contracts to litigation and arbitration matters.

International Exchange

International work at many large firms is primarily generated at the firm's home office and then trickles down to the various local offices. At global firms, business development opportunities flow in all directions, where, say, a local M&A matter being handled in Hamburg may turn into a wider opportunity for financing work in London or arbitration lawyers in Paris or Washington. Or if a large UK bank needs assistance with a capital markets matter in Turkey, we draw on both our London and Istanbul lawyers to seamlessly handle all aspects of the deal. Indeed, roughly three quarters of our major clients rely on 10 or more of our offices to handle their global legal needs.

More important than where client work originates is the ability to transfer successful models to new jurisdictions. We drew on our past work developing toll road projects in Latin America, where public-private partnerships have been used successfully for decades, to help a Spanish client undertake an innovative refinancing of the Chicago Skyway toll road. This was not only one of the United States' first privatized toll roads but also one of the first to employ a combination of insured bonds and derivative instruments.

Solving Cross-Border Conflicts

Increasingly, clients require assistance with matters that no longer neatly fall within a single jurisdiction. Ten years ago, only one agency ' the U.S. Department of Justice's Antitrust Division ' hunted for global cartels. Now that agency is joined in its efforts by enforcement authorities in more than 20 nations and, of course, the European Union. Twenty-five years ago, only the United States and a few European countries had any merger clearance regulations; in recent years that number has grown to nearly 70.

Understanding such cross-border issues really came into play when a client in the liquor business wanted to sell its highly successful vodka brand to a large spirits corporation for more than $2 billion. The deal closed in New York and Paris simultaneously and was structured as an asset deal with two main sellers with assets spread across a dozen countries. Completing it successfully required that the various contractual relationships simultaneously clear all the legal hurdles in multiple jurisdictions and that none of the acquisition terms conflicted with rules in any of those jurisdictions.

Deep knowledge of cross-border rules also helps clients resolve matters more efficiently. In advising a large paper company in Mexico on its $800 million restructuring, we successfully tested the strengths of Mexico-U.S. insolvency rules by filing an ancillary proceeding in the United States Bankruptcy Court for the Southern District of New York, resulting in the court permanently enjoining creditors from challenging the Mexican company's restructuring in the United States. This marked the first time that a U.S. bankruptcy court has recognized and extended comity to a Mexican court order confirming a reorganization plan under Mexico's Business Reorganization Act.

For law firms really seeking to impart value to clients from a global model, it takes far more than a label of 'international' or a few overseas offices. Done right, the benefit to clients is unparalleled and offers firms myriad opportunities to constantly renew themselves.