Today (21st February) Chilli IQ’s 7th Managing Partners Forum kicks off at the Sheraton Mirage Resort & Spa on the Gold Coast in Australia. So what topics are on the agenda?
Law firms are facing a squeeze similar to that being endured by the retail sector; they can be the legal sector equivalent of a Chanel or a Zara, they can’t be both at the same time – and there’s very little profit in the middle ground. UK based strategist and author Alan Hodgart warns that law firms are currently caught in the same predicament as retailers, where there is a prosperous luxury tier and a successful mass market tier, with relatively little in the middle ground. “I liken the legal market to retailing. You are either a Zara or Chanel – there’s not much in the middle,” says Hodgart,one of the keynote presenters at the event.
Hodgart forecast that the legal market, unlike the accounting sector which is dominated by four major brands, will eventually settle to eight to ten global firms, 15-20 smaller but still international operations, and then “a big gap to the rest.” He said law firms need to recognise the extent of the hollowing out now taking place on a global scale and develop a three year strategy to ensure they land in the sector they are best equipped to serve.
For a firm like Ashurst, which in November concluded its three year long and occasionally challenging integration with Australian firm Blake Dawson, the focus is clearly on achieving a foothold on the upper rungs of the global ladder.
John Carrington, managing partner of Ashurst’s Australian operations has said that the merger had been spurred by the arrival in Australia of foreign law firms, the need to service clients with increasingly global footprints, and the desire to attract top calibre lawyers keen to work on a global stage.
Carrington, who will also present at the Managing Partners Forum, says he will use the Forum to detail the firm’s strategy and explain the extensive programme of work which had been undertaken to ensure the successful integration of the firms which concluded in November. Crowning that integration programme has been the full financial integration of the firm, meaning Ashurst now operates with a single profit pool, common partner appraisal and a single remuneration system for the global firm. The firm also has a new board, a new global executive, divisional reporting and global client programmes said Carrington.
While Ashurst has a strong foothold in Europe and Australia as a result of the merger, it has yet to embark on a US push. A US merger however remains on the firm’s agenda. Ashurst’s expansion plans reflect a global trend according to Hodgart who believes that the “size and shape of the legal market will change dramatically” as regional economies grow. He has forecast that by 2020 Asia Pacific’s share of the global legal market will rise from 13% to 20% which has significant implications for regional and global firms.
He says law firms needed a three year strategy which clearly established the range of services they would provide and how. “The idea of full service is nonsense. Firms lose money on the ‘nice to haves’”, he said, adding that even the best managed firms in the world (he has nominated Freshfields as an example) had undergone deep restructuring to shed partners whose practice focus did not align with the long term firm strategy. “Law firms have to operate as proper organisations with standard processes and performance management. Freshfields is one of the best managed firms in the world. It got rid of people who wouldn’t accept it (the strategy)…even heavy billers. It is better to sacrifice revenues to get profits,” he said.