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International expansion of professional services companies in general has been gathering pace since air travel became affordable about half a century ago. The rise of the internet age further facilitated the globalisation of business, enabling offices around the world to stay in touch via email or videoconferencing. Law firms, as an intrinsic part of the global economy, have been expanding into international markets for several decades. But will the pandemic serve to help or hinder the globalisation of law firms?
Initially it was mainly large City firms which set up overseas offices or merged with international peers. A good case study is perhaps Norton Rose Fulbright:
The firm now has over 3,700 lawyers and other legal staff working across Europe, the United States, Canada, Latin America, Asia Pacific, Africa and the Middle East.
Several City firms followed a similar trajectory to Norton Rose Fulbright, with many of the largest outfits now operating across most continents.
But an interesting development in the last decade or so is the expansion of medium-sized non-London centric firms into international markets. For example, Osborne Clarke was originally a Bristol based firm. It only expanded into London in the late 80s, albeit the first regional law firm to do so. It opened a US office in 2000 and now has over 900 lawyers in 25 international locations.
Although it still tends to be commercial practices which dominate the international legal sector, it’s no longer restricted to large City players. The regional medium-size sector is also very much a part of globalisation.
One of the main reasons for law firms to open an office overseas is to enable them to take advantage of emerging markets. This is demonstrated by our previous example of Norton Rose Fulbright which opened its first international office in Hong Kong, where the banking sector in particular was taking off at the time.
During the noughties, many firms eyed up the group of emerging markets known as BRIC (Brazil, Russia, India and China) which later, with the addition of South Africa, became BRICS. These days, many City firms have a presence in major cities across the BRICS, taking advantage of these crucial streams of business. China in particular has undergone fundamental changes over the past few decades, becoming one of the world’s fastest growing economies. Whereas 30 years ago a New York office was often emblematic of success, these days an office in Shanghai or Beijing is more likely to symbolise the economic zeitgeist.
One apparent trend in recent years has been expansion into - or partnership with firms in - the Middle East, notably international hubs such as Dubai. Indeed the United Arab Emirates (UAE) was the eighth most internationally diverse region by law firm density in 2017.
As business in general has increasingly looked beyond borders, it has become necessary for law firms advising their business clients to understand a range of cross-jurisdictional matters. Although some lawyers are dual-qualified and can support clients operating in two or more countries, most firms ultimately need to either establish overseas offices or partner with law firms in foreign jurisdictions. Some of the areas of law which traditionally favour a multi-jurisdictional approach include:
But it’s the technology sector which is perhaps one of the most in need of international legal advice at the moment. In particular internet based companies, such as social media platforms, generally offer services to a global customer base. As such, they need to understand the regulations in the countries for all their users across the world. Added to the cross-jurisdictional complexity is the fact that internet law is a fast-developing area, which often reflects different societies. Although there can be harmonisation of certain regulations, such as the GDPR across the EU, this often raises obstacles for companies in other jurisdictions. Indeed, the fact that many US websites shut off access to EU citizens after GDPR serves as an example of the legal challenges faced.
It is too early to say whether COVID-19 will have any long term impact upon the growth of UK firms into international markets. But it is likely that having a physical office presence will become less important, not just overseas but also within the home jurisdiction of firms. Many lawyers took to working from home during the lockdowns and lots of firms have committed to allowing their staff to carry on with remote working into the future, at least to some degree.
But whilst office growth is likely to wane, and many firms may well decide to downsize, most firms have been able to adapt to remote working over the past 18 months and now have more robust infrastructures in place, including cloud based practice management suites and ubiquitous videoconferencing. What this means is that teams of lawyers based in different countries are better able to work together remotely than ever before.
So it’s no longer necessary to open overseas offices for a law firm to expand globally. Firms which require international expertise can simply hire lawyers across the world with the right skills, provide them with relevant logins to any tools required, and bring them on board.
One of the opportunities of the pandemic is actually a growth in the very products used by lawyers for remote working. This essentially builds upon the rise of big tech and internet based companies who require lawyers to assist them with providing their products globally.
The world is more interconnected than it has ever been. Globalisation of the business world, together with the rise of the geographically agnostic big tech sector, means that lawyers who can help businesses to navigate international legal issues are increasingly in demand.
Law firms which have the ability to call on expertise in multiple countries will clearly continue to have an advantage in terms of attracting international business clients. However, there is arguably less of a need to physically open offices in multiple jurisdictions in order to cater for international clients. The globalisation of the legal sector is likely to continue - but the hallmark of an international law firm will be access to a network of lawyers in multiple jurisdictions, rather than lots of offices dotted around the world.
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