March 2010 // Strategy and foreign investment in France.

Within the scope of an international development strategy, whether it involves opening offices abroad, alliances, etc., it is important for a law firm to take into account the dynamics of international commerce and the origin of foreign investors in France.

In this regard, the 2009 Report on Job-Creating foreign investments (FDI (1)) in France, made public on Tuesday, March 9, 2010 by the French Agency for International Investment (AFII), makes extremely interesting reading. 

The main points are summarised below:

• France has fallen from 2nd to 3rd place in terms of Foreign Direct Investment:

  • Despite an unfavourable context…
    • The recession in international trade (-12%).
    • A decrease of over 40% in FDI flows worldwide in the first half of 2009 as compared to the same period in 2008.
  • in 2009, France remains one of the leading countries receiving FDI…
    • €48 billion in foreign direct investment in France.
  • and confirms that it is attractive:
    • “The 4th best result over the last 15 years”.
      
      
• The United States have lost their traditional position as No. 1 investor in France (in terms of number of projects) to Germany:

  • 113 projects initiated by German firms compared to 106 projects launched by US firms.
    
    
• The increase in the number of foreign projects initiated by European companies:

  • Italian companies, with 56 projects, confirm their interest in the French market with the number of projects undertaken doubling compared to 2007.
  • On the other hand, there has been a significant decline in investments made in France from the UK, with 39 projects in 2009 (compared to 53 in 2008).

March 2010 // The similarities between the “Foncier Home” approach and the setting up of an interprofessional platform

According to the La Tribune newspaper on March 5, 2010, the Crédit Foncier “megastore” which is due to open in September intends to offer an “all-in-one solution” for real estate projects.

“The Megastore called Foncier Home will enable individuals, in a dedicated space, to find an all-in-one solution for their real estate projects, from property search to real estate appraisal through financing advice, all by using new technologies …”

I could not resist the idea of quoting a few extracts from this article which illustrate the benefits of an interprofessional approach:

• “… this is a “differentiating approach, as Foncier Home bases itself on the client's expectations to offer him services tailored to his needs…”.
• “… this space is indeed intended to “meet all types of needs: selling to buy, investing, having work carried out on property, selling property, purchasing property for a non-resident ...”.
• “… a first partnership has been entered into with Amepi, which brings together the exclusive offers of around 500 estate agencies in the Greater Paris region alone …” “Other service providers are in the process of being selected …”.
• “… the property subsidiaries of the BPCE group, the property manager Foncia, the property developer Nexity and the construction group Maison France Confort, may all soon announce their participation”.
• “… we will also have partners specialising in housing development schemes, top-of-the range property or holiday property …”.
• “… Foncier Home will be paid intermediary fees by the bank for the loans it sells and will also receive fees from its various partners”.
• “… not present on the site, they would only be in the second line, which will enable Foncier to control the client relationship …”.

March 2010 // An international culture and international development

Many independent French law firms give a lot of consideration to their international development strategy. There are a lot of different strategic options for development and it is difficult to choose the right one.

In any case, there is an essential aspect that is too often neglected, the development and/or strengthening of an international culture among the lawyers either along with development or as a preliminary.

What are we talking about?

An international culture means all the lawyers’ abilities and their behaviour when dealing with international clients and handling their legal matters.

In order to ensure that the firm has the ability to meet “international standards”, it is good policy to carry out a diagnostic review of the firm’s situation by analysing it from the following standpoints:

• language skills (the lawyers themselves and administrative staff);
• current recruitment standards;
• the skills of the people in direct contact with foreign clients:
  • those answering the telephone or on the reception desk,
  • secretaries and assistance,
  • location of premises and support,
  • technology tools already in use …
• the quality of the tools used to present the firm to foreign clients and particularly its website (editorial and language aspects, quality of content);

March 2010 // Law firm organisation and business development

A few observations:

• Depending on the periods and the development phases in the life of law firms, lawyers find themselves faced with problems of human capital or organisational issues.

Unsolved organisational problems are a source of frustration and demotivation and often lead to differences among the partners themselves or with management.

A good back office and front office structure is essential to help a law firm to develop. It allows the partners to concentrate on their profession and not to have to worry about office support issues …

Once a certain size has been reached, it becomes possible to introduce certain posts within the firm; for example:

The importance of communication:

• Whatever the size of the firm, it is essential to draw the boundaries for the respective administrative functions and to know precisely who does what;
• New technologies and the setting up of an intranet help to improve communication. But photo directories, induction manuals, detailed phone lists are also simple ways of meeting this objective.

March 2010 // Operational efficiency is an essential accompaniment to a good strategy:

Developing a law firm requires not only preparing a roadmap that enables it to plan its course but also ongoing improvements to operational efficiency.

For a law firm, operational efficiency involves delivering its services quicker and more efficiently with ever better quality.

What is the best way to go about this in a law firm?

• First of all, by identifying and describing the main processes in each area and determining the possible improvements for each and every one of them.

• Then, for these main processes:
  • observing the way in which the firm’s main competitors act to produce and deliver their services;
  • creating working groups with regard to key processes in order to improve them, such as for example:

    • organisation of due diligence reviews …
    • organisation of the billing/fee collection cycle;

based on the experience of the teams which get the best results in key areas within the firm.

• Finally, it is important to consider how to make better use of new technologies for each of the identified processes.

November 2009 // Strategic Plans for Legal Departments:

In the context of an economic crisis and budget restrictions, it appears to be more and more essential for a Legal Department to have a strategic plan.

For a Legal Department, the strategic plan consists of a written document setting out the targets which the department wishes to meet, how it intends to achieve them and the period covered.

Beyond the department’s aspirations and its vision, the plan has to explain what the department intends to do, mentioning the people responsible for its execution; it also has to comprise milestones for each of the years covered in order to able to measure progress in achievement of the goals.

As far as the length of the plan is concerned, it is clear that a one-year term is insufficient. In the current market environment, 3 years seems to be the most realistic period to implement the desired changes.

In sum and within the limit of the available resources, the plan must be a genuine roadmap for the Legal Department’s essential priorities.

September 2009 //For a General Counsel, the value added by a law firm begins at the point where the expertise of the company’s Legal Department ends …

In other words, the most influential lawyers are those who perfectly comprehend the skills and resources of a Legal Department and concentrate on the best way to add to them.

This is why it is in the interest for outside lawyers:

In this regard, we believe that the requirements of the legal departments of large multinationals should significantly increase in the following areas:

• anti-trust law;
• regulatory aspects;
• environmental law and public law.

September 2009 // Understanding the “non-legal” priorities of General Counsel

I have lost count of the number of times I have noticed that law firms do not take enough interest in the non-legal issues facing the General Counsel who are their clients.

I also often hear General Counsel express their surprise or even complain that outside lawyers have not invested sufficiently in getting to know their organisations and activities. According to them, the main reason for this is because law firms bill based on time spent.

Times have changed and outside lawyers would be well inspired to invest more to assist their clients in their various strategic and organisational problems.

For example, a law firm may in particular provide precious assistance to a legal department:

• by passing on to it some of its modes of functioning and work methods;

• by allowing it to benefit from its know-how (knowledge transfer);

• by improving the legal information provided to in-house lawyers and in particular by sharing the experience they have acquired from other players in the same business sector, although naturally without breaching confidentiality.

September 2009 // Efficiency and productivity are becoming just as important to a General Counsel as quality or excellence

A lot of the general counsel I meet are now being forced to do more with the same or even a smaller budget.

In order to do so, they have to improve their organisation in terms of efficiency and productivity.

They expect their law firms to do the same and express serious criticism with regard to their Business model in this respect.

For them, law firms need to radically change their approach to productivity which they sum up as follows: “the more hours you bill, the more productive you are”.

Accordingly, they expect their lawyers to look for ways of producing better work at lower prices; in other words, they need to be cost effective for their clients.

June 2009 //Darrois report: the main recommendations made with regard to the profession of notary.

The main provisions of the Darrois report with regard to notaries are set out below. Some of these proposals may appear to be unfavourable to notaries, particularly if they are looked at in conjunction with the more favourable proposals for lawyers. Nevertheless, after giving the matter more thought, partnerships between members of several different professions could enable notaries to diversify their activities and make it easier for them to have direct contact with companies. They should therefore be borne in mind in the strategic thought processes undertaken with regard to development of firms of notaries.

June 2009 // The American Law 100 and US firms with offices in Paris.

The latest figures from The American Law 100 are of particular interest due to the insight they provide on American law firms with offices in Paris.

1. First of all, the firms with Paris offices are generally well-placed in the rankings.

Indeed, out of the 32 American firms with offices in Paris, 30 are ranked in the American Law 100 and 26 are in the top 50.

More specifically:

-15 are in the top 20,
-11 are ranked between the 20th and 50th place and
-4 are ranked between 50th and 100th.

-Their good position is also demonstrated by the fact that:these 30 US firms have cumulative revenues of US$29.7 billion, i.e. 44.3 % of the total revenues of the firms ranked in the Am Law 100 2009;
-7 firms have Profit Per Partner of over US$2 million;
-8 firms have revenue per lawyer of over US$1 million;

1. However, in terms of changes in revenue, the image is rather different.

Out of these 30 firms,

-4 saw a drop in their gross revenues in 2008 (while the cumulative revenues of all the firms in The Am Law 100 increased by 3.9% over the same period):

-Latham & Watkins,
- Shearman & Sterling,
- Dechert,
- Willkie Farr & Gallagher.

The decrease is however moderate as it does not exceed 5% for any of these firms.

However, out of these same 30 firms,

-17 registered a decrease in their profit per partner as compared to the previous year.
- For 9 of them, this decrease was significant as it exceeds 5%.

Similarly, if we take a closer look at revenue per lawyer, it can be noted that out of the 9 firms in the Am Law 50 who registered a fall of over 5% in their revenues per lawyer, 7 have offices in Paris.

Finally, 8 US law firms with offices in Paris have dropped in the Am Law 100 rankings.

June 2009 // Getting ready for the future after the crisis!

There are several key ways that will help firms ride out the current financial crisis and safeguard their future!

1. Rethinking their business model;
2. Investing in the future;
3. Finding new areas and markets: “Tomorrow’s growth areas”.

It is true that in a crisis situation we all tend to focus on our own particular situation and look at the short term only – this is not the right way forward, it is also important to work on preparing for after the crisis by developing a medium-term vision which will make it possible to bounce back as soon as the initial signs of recovery become apparent.

One example is the recruitment of new talents. The period is particularly favourable to firms that have opted to pursue their efforts and investments in this area. The talent war is now ebbing and firms who have shown discernment by taking the risk of recruiting in the key areas of the future will subsequently have a genuine advantage as compared to their competitors

June 2009 // The importance of litigation!

A law firm’s interest in maintaining a litigation practice is unquestionable; however, I think it is also important to bring to mind some of the less obvious benefits that can be obtained from developing a litigation practice.

Firstly, the handling of some high-profile disputes and litigation cases is an unrivalled way to showcase the firm and its reputation, making lawyers proud of their firm.

Another, non-negligible benefit is the fact that, as compared to other activities, this service line provides easier access to the executive management of companies and large multinationals with regard to their most sensitive matters and makes it possible to set up a privileged relationship with them, thus strengthening the links between the law firm and its clients.

Finally, in the current context where it is essential to bolster the firm’s economic situation, the length of time that legal proceedings usually take will allow the firm to weather the ups and downs in the economy and help it get through the financial crisis.

March 2009 //Shareholder value and PEP

I’m sure you must have read that Jack Welch, former head of General Electric recently said “On the face of it, shareholder value is the dumbest idea in the world … Shareholder value is a result, not a strategy.”

I wonder what Jack Welch would have to say about how the managers of international law firms justify their strategy by using the yardstick of PEP (Profit per Partner). I think he would tell them exactly the same thing and encourage them to adopt an approach that is less focused on the short term and places more emphasis on fundamental growth drivers like client development policy ….

March 2009 //Setting the course and keeping everyone motivated

To tackle the worsening economic situation and the uncertainties in the legal market, it is essential to reassure associates and other staff members and to avoid them losing their motivation.

In a context where staff members are legitimately concerned about their future, the management and partners must:

• be capable of reassuring them by setting the course and addressing their concerns;

• do everything they can to mobilise their associates and build a collective spirit to show their combativeness on the market:

1. by adapting activities to respond to the crisis;
2. by improving client service;

• show their ability to get their associates to apply greater professional rigour and be more disciplined in their approach to their work;

• do their utmost to get everyone involved in firm development by encouraging them to contribute to:

1. improvements in organisation;

1. the development of new activities and new services:
   - redeployment in new business sectors,
   - training in new disciplines…,
   - mentoring in client development …

1. projects that will prove to be useful in the long term.

In order to do so, it is essential to adopt a transparent, regular communication policy that goes straight to the point. Nevertheless, this policy will only be understood and taken onboard if, besides showing that they are willing to listen, management and partners set an example and make equitable contributions to the efforts being made.

February 2009 //Crisis and consolidation: choosing the right merger partner

The global crisis may serve to spur and accelerate the wave of consolidation so often announced on the French and international market. Firstly, some firms may look for greater security, seeing size as a way to protect themselves through economies of scale. Secondly, the crisis enables “trail-blazing” firms to take advantage of more favourable market conditions to carry out strategic external growth transactions.

Over the last few months, I have noted an increase in the number of negotiations being conducted by law firms with a view to combining their practices. Finding the right partner is nevertheless no easy matter during a period of crisis. For reasons of security, law firms tend to give priority to targets with stable, predictable financial ratios. However, it is common knowledge that in a period of uncertainty, it becomes particularly difficult to predict what the future will hold. This is why it appears to me to be extremely important in these troubled times to base the search for a partner more on other criteria such as convergence of cultures, a keen desire to build a common project and the entrepreneurial potential shown by the partners of the structures with which a link-up is being considered

February 2009 // The economic crisis and governance: alleviating the risks of friction between partners

The crisis is bringing about radical change. By favouring growth in new areas, it is causing new business models to emerge, bringing other sectors to the fore and consequently turning the spotlight onto different partners in law firms.

The crisis will therefore upset the delicate balance that often exists in law firms. During the growth years in finance, partners in practices that are now in difficulty were thrust to the forefront. Firms in which the M&A and private equity practices dominated have now had to adapt and revise their strategy by enlarging their services to include other areas of specialisation (litigation, restructuring and criminal law in particular). 

June 2008 // Management: The Art of Performance I like the basic principles of management advocated by Joan Magretta and Nan Stone in their book, What Management Is, The Free Press, New York, 2002. Clarity in communication is the foundation of a successful organisation. While managers are concerned with immediate results, they must also look to the future. Entrepreneurship and management are not two separate professions (an entrepreneur who does not become a manager will not succeed and vice versa). Trust is the golden rule, with inherent consequences: doing what has been decided and clamping down on failures to follow plans. A manager, who is neither a philosopher nor a social worker, should not waste his time trying to change people but rather help them to put their professional skills to good use. The principles outlined are undoubtedly wise and are in line with my experience as a manager, especially principles 4 and 5. June 2008 // Notaries and Lawyers - Clients with Similar Demands! When reflecting on the evolution of the demands of notaries’ clients, many similarities can be observed with regard to those of lawyers. Firstly, as is the case for lawyers, clients are more and more demanding in terms of quality and notaries’ involvement in the matters they handle, and of course, want ever shorter deadlines. In addition, like for lawyers, clients expect their notary to assume a more advisory role and not only to draft deeds. Lastly, whether we like it or not, clients tend more and more to consider their notary or lawyer as a service provider and hence have higher expectations in terms of how the whole issue is handled (quality of service), as compared to a few years ago. June 2008 // Crisis ? I often get questioned on the impact the current financial crisis may have on law firms. In my opinion, there isn’t a straight answer, and the answer varies depending on the specificity of the firm’s activities. In the case of firms with balanced areas of practice (litigation, advice, transactions and restructuring...), they should continue to perform well. For those whose practices are less balanced, we are beginning to see signs of problems on the horizon. In other words, it seems impossible, in my opinion, to make general remarks that apply to the entire legal market. What seems to be the most important in the current situation is that the market will have changed by the time things get back to normal. It’s no time for status quo and the firms that grasp the opportunities available on the market today will win the day tomorrow. JUNE 2008 // What are the Characteristics of a Good Managing Partner Today? Surveys on what makes a good boss have become quite commonplace (see the Le Nouvel Economiste, 24 April 2008), and the same question could now be asked about the managing partner of a law firm. NEWS IN BRIEF, about ten years ago, the profile for a good managing partner boiled down to a talented  “senior” contributor to the firm, with a vision. This is no longer enough. The professional skills required to manage a law firm have not only become wider but also more complex, changing the very requirements for the position and its occupant. These deep-seated changes have been brought about by intense competition, international legal work, and the expectations of partners, support staff and clients alike.  The variables of management and efficiency have now become decisive factors. It appears that today’s managing partner is becoming more and more versatile, and definitely has a “hands-on” side to his personality, far remote from the management methods of the 90s. Like today’s bosses, he is becoming more and more a “standard bearer” representing the firm’s values. As a result, personality and communication skills are becoming more and more important traits for a modern managing partner.