Biz Lunch (#11 November 2017)

More Than Just Business

During his first visit to Ukraine, Paul Rawlinson, Global Chair of Baker McKenzie, told UJBL readers in a special interview of his vision of the balance between local independence and a global strategy, partnership policy and innovation, as well as the global challenges facing the legal marketplace during celebrations to mark the 25th anniversary of Baker McKenzie-Kyiv.

What is Baker McKenzies strategy? How does the firm meet the challenges of the global legal marketplace?

Paul Rawlinson: Baker McKenzie is an international law firm that operates in 47 countries with 77 offices. How is that organization relevant to todays economy? The firm was set up, obviously with the different economic and different client needs, so we are always looking at how we can be responsive to what our clients are asking for. And the strategy of the firm is to really partner with clients, to help them navigate these risks. You look at the risks of doing business in different markets, and also risks of changing the regulatory environment in different sectors: financial sector, energy sector, consumer goods or pharmaceuticals. You`ve got different issues which clients face in terms of doing business internationally. So our job as lawyers is to do M&A deals, to help them with the IP protection, to help them when they get litigation. Typically now we are working with those clients in terms of their business strategies, to help them before these issues arise, and to help them to manage those risks. When we talk about the role of Baker McKenzie, we are moving from a more traditional view of the lawyer to one that`s partnering with clients through industry knowledge, a real understanding what the client business agenda is, helping clients to navigate those risks. What does it mean? It means that we need to equip our lawyers with those skills, not to just be good technical lawyers, but to be able to really understand the industry, how that client operates in this sector, what the challenges are, and to be comfortable talking to the client about the business issues. So when they come back to the office with a mandate, the client wants to do, they have got a much better understanding about that client and the needs of work to be done.

So the strategy of the firm is to look more at an industry focus, to equip our lawyers with business skills as well as legal skills, and also to continue to stay ahead of the developments in the market. The market is moving quite quickly, so using artificial intelligence, using innovation to help us deliver legal services more efficiently or price competitively is also what our clients want to have because clients are pressed with their needs, with a fixed legal budget they need lots of things to happen. But before this happens we have to respond in a more innovative approach to the way of a pricing services, to the way as we deliver our services using different means of mechanisms to do that.

What is the geographical strategy of Baker McKenzie? Do you see any opportunities in the emerging markets like Ukraine, and other CIS countries?

P. R.: We have been in Ukraine for 25 years and even longer in other emerging markets in the region. Right now our strategy isn`t to open new offices unless its really strategic. We`d love to be in India, but we cant be because of regulatory reasons. We certainly look at Africa as it is a great opportunity because our clients are increasingly looking to invest in that continent where we have presence in three offices: Cairo, Casablanca and Johannesburg. Africa is a huge area. Although we are not looking at opening offices in more countries right now we have a real understanding as to how we can continually adapt our services in all the markets which we have a presence. Take Ukraine as an example, we are looking at what are the business needs of our clients today. We just had a meeting with a number of business leaders in the Ukrainian community, talking about the need to encourage investment, how can we help that. They need to improve anticorruption laws and how can we help with them. They need to help with a labor market in terms of employment rights and obligations and how we can navigate that. These are the issues that clients want to talk to about, to help them manage those issues and help them ultimately succeed in this market. So our lawyers here, in Ukraine, are looking for ways to improve the connectivity with what the clients want. At the same time, still be an excellent lawyer and technically gifted for people to do the work to a high standard.

Since the financial crisis, clients have become cost-sensitive and put pressure on the pricing of law firms. How did you feel it in Baker McKenzie?

P. R.: The clients want value for money, like all businesses. They want to know when they are getting the best value, and they want to have an excellent service but they want it for the right price. Typically clients started to become unhappy with the notion of billable hours. Sometimes that can be a right model but more often now we talk to clients about the overall value of the matter. So they give us an M&A deal, or they give a tax assignment or whatever, we can teach them about pricing much more innovatively, both sides being more creative. We can have a sense of how long it will take, and what sorts of resources we need, what a client is uncertain about. When you have a client that is giving you lots and lots of different pieces of work, it is easy to do that because you can look at the relationship as a whole, with some issues you handle more efficiently than others, while sometimes there will be unexpected events in a matter which no-one could predict. The more you can keep them away from the client the better, and just keep a client happy with the uncertainty of a feeling that next you will start to sort a really good relationship with clients.

Baker McKenzie is known for giving lots of independence to its offices at local level. What is the advantage of such an approach? What is the secret to maintain this balance of local independence and global strategy?

P. R.: It is a very good question. As a global law firm we have many global clients who expect consistency across markets, and we have process and proceeds in play to manage our global clients in a consistent way. And all the offices in the firm know what that means. We have relationship partners, people who manage those accounts, and there should be no differences in the service level wherever clients use us. At the same time, we encourage local offices to have a certain amount of work which is domestic work. We don`t need to manage that because they know what the market needs but if you are acting for a global client, we are very integrated. It`s getting the balance right between offering a global service, offering in the same format, in the same standard, but having lots of flexibility so the local market can adapt to the needs of domestic clients. It is not something that we are uncomfortable with because weve got used of operating like that. The shift is more towards global work because more of our business is international. Even here in Ukraine a significant proportion of work does have an international element. So more and more of our work requires multiple offices to work together and collaborate.

What is your partnership policy? As far as I know from the history of the Kiev office, here the partners were promoted internally, from within the firm. Do you hire external partners at your other offices?

P. R.: Yes, we do. We have the good quality people coming through. And generally speaking, its a really good thing to have lots of people coming though the firm who train with us, understand the firm, the culture of the firm and to grow people to become our future partners. So that is still very much the norm with all the advantages Ive mentioned. You get a real consistency of people coming through with in built loyalty to the firm.

But with lateral partners they are also very beneficial because they bring something different. Besides you may not able to grow if you dont have the right people in the right area. You do need to supplement this with laterals. And we have increased our lateral hire rate particularly in the financial area, where we need to improve our numbers generally and get bigger. The answer to this question is you need a healthy mix of both home grown and lateral talent. Its not a policy issue here in Kiev. If you have the luxury of having good people coming through then you dont need to hire laterals, thats fine. If you have an area where you still have lack of expertise, then sometimes you have to bring people in from outside. If you are growing at a rate where your people coming through is just not enough to sustain the growth you need.

Your firm is known for its diversity policy. What is the reaction of your clients? Do they appreciate this approach?

P. R.: They do love that. I mean they are driving it. Because they ask us to make sure that not just when you do the pitch, but when you do work, that they have a diverse range of people, not just gender but also different perspectives. Gender is the key one for many of our clients. They want us to have diversity in a good sense of the range of perspectives. It also reflects on the way the clients look and feel as well. And they feel more comfortable with a mix of different types of people around the table from agenda, ethnic and angles of cultural basis. Weve got a way to improve, but I think weve had a good track record of tackling that issue, seriously introducing gender targets. Last year we had 40% female partners promoted globally across the board. It doesnt improve the imbalance right away and it will take some time to work through the system, before we could equalize overall. Our ambition is to meet our global inspirational targets.

You have already touched upon the legal tech. How do you introduce innovations in Baker McKenzie? Do you invest in artificial intelligence, special programs or applications?

P. R.: AI means different things to different people. The way we look at it is looking at innovation as the topic, having a group of people looking at it, recommending that we invest in certain things certain technologies, certain skill sets, and may be even buying an expertise from other areas in the future. What weve done so far is invest in different technologies, and train people how to use them to be more efficient in the way they deliver services.

So if you are involved with a major piece of litigation and you need to review a million documents historically you have needed a major team to get involved. Now we have a tool that pre-selects that number down to maybe 10,000 documents and then turn that over to a human mind to look at them. Sophisticated AI can achieve that through key search terms, and things like that.

If you have an M&A deal, and you are doing some due diligence, checking contracts, you can also use another product weve rolled out to make sure you are not wasting time on the relevant documents. So again, searching through against the large volume of documents to make the lawyers job quicker, easier, faster, and more efficient.

These technology tools need to be integrated with the way you work, always making sure you understand how to use them and understanding the limits they have so that the human intervention can be appropriately used once the first cut of document review is complete. Two examples of the way in which innovation and AI can help to reduce the costs to the clients, making them more efficient, and also making lawyers job more interesting. Its all about gaining efficiency and getting value added. So when the client sees the bill they know that the lawyer spent quality time on their matters and not including hours without good reason.

We have seen that Baker McKenzie went under slight rebranding recently. How does it affect the positioning of the law firm?

P. R.: Its important. So for me its not about the visual identity of Baker McKenzie. Yes, it is a bit of a visual boost. I think all companies have that, every now and again. But what sits behind that? I think its a modernization of the way we work.

So we are developing these ways of working that we might call the New Lawyer. What does the New Lawyer look like? The New Lawyer is socially mobile, an agile worker probably with a millennial, different way of working, comfortable with technology, probably speaks multiple languages, is comfortable talking to clients about business and legal issues. So, the rebranding is, if you like, a reflection on a modernized view on what we expect of our people, and also what our clients can expect of us, rather than some other law firms being more distant, maybe even arrogant, and dont really listen, not good communicators. That is not us. So, the brand we want to project is a modern, young version of who we are. Very international, very global, very comfortable with clients, very accessible and mobile, and comfortable across cultures and markets. For me it wasnt so much about a flashy sign, its more what was sat behind that, and what reflects our values.

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