As we are often reminded these days, the world is flat. Or at least flattening. Trade is global. As the economy picks up, the survivors from the Western economies pick themselves off the canvas, and look enviously at those economies that have continued to demonstrate solid growth over the past couple of years. Whether or not these economies are truly decoupled, the strength of domestic demand has undoubtedly contributed to their recent success, and I feel confident that as the West emerges from recession, the pace of global expansion from the big companies will soon pick up again.
So what does this mean for lawyers, and what has it got to do with chains? Leaving the chains question for later, for corporate counsel in companies that are entering new markets, the pressure to get up to speed quickly with local law and compliance, ways of doing deals, company secretarial requirements, labour law etc etc etc is significant.
While many corporate counsel may not be “on the ground” in these new countries (though many will be), the exposure to these new countries is significant and is often very difficult to prepare for even with the support of local lawyers.
I can recall being part of the learning process when my NYSE listed employer began to do business in Saudi Arabia for the first time. It was a steep learning curve for many of us, but fortunately a very positive experience. After a couple of years and a few deals there, the risks that we perceived when entering the market were in fact very different from the day to day challenges that faced us. As a lawyer, one of my first problems was finding the right advisor to help us. After having a less than successful experience with a global firm in the country, we ended up using an American ex-pat, who had lived there for 20 years. His understanding of the local business culture, coupled with his understanding of the modus operandi of a US client, proved an excellent fit for us. He moved firm during my time instructing him, but the service remained consistent and I learnt a lot about the country (outside the specific legal advice he was providing) from working with him.
So where do the chains come in? Well, as legal markets deregulate, global competition intensifies. English and American lawyers are beginning to find that lawyers from outside the jurisdiction (for example in India, South Africa or the Philippines) are giving advice to their clients, based on domestic (i.e. UK and US) law. Admittedly in many cases the advice does not extend to the most complex work, but it is substantive legal advice and the lawyers involved are learning fast and their cost structure provides an attractive value proposition.
By contrast, there are relatively few Western lawyers who are able to give substantive legal advice in the emerging markets. Don’t get me wrong, they certainly exist, (and the practice of rotating trainees in the global firms is an excellent way to get genuine experience in other jurisdictions, which can then be taken back “home” and leveraged for many clients) but they are not widespread and are often fully utilised.
But (and here’s where the chains come in), there are many, many lawyers in the US and UK, who never get any hands on experience of advising on projects in other countries. The traditional model of qualifying in one jurisdiction, and advising solely on matters subject to the law of that country is being stretched by the needs of today’s clients. Add to this the inherent risk aversion of many lawyers, and the limits their professional indemnity insurance may put on their ability to give more general advice overseas, and I think we have a set of virtual chains that need to be thoroughly examined.
In thinking about this situation, I think particular attention needs to be given to the impact on tomorrow’s lawyers. How can firms equip their trainees and junior lawyers with the ability to advise clients across jurisdictions. I’m not advocating that lawyers attempt to have a detailed (and up to date) understanding of the law in multiple countries; for all but the brightest, that’s unrealistic. But, I believe an understanding of how to do business in some key countries outside their home jurisdiction, a grasp of the culture, some key legal basics, and a good network of local contacts, would go along way in providing some very valuable assets for the firms, and a set of skills and experience that would equip the lawyers for a very different legal marketplace in future. Not all lawyers will need this training, but increasingly, an excellent grasp of domestic law may not be enough to ensure success.
So go forth and break your chains, but if you invalidate your insurance doing it, please don’t blame me…..