It’s time for international law firms and multinational corporations to dust off those contingency plans again. Companies are seeking advice from their outside counsel, wondering what to do if the war games China is playing in the Taiwan Strait turn into an all-out war. International law firms are no doubt doing the same. Seems like we’ve been here before.
It was only six months ago that law firms and their clients scrambled to respond to Russia’s invasion of Ukraine. At the time, it seemed as if they weren’t taking action fast enough, but most law firms shuttered their doors relatively quickly. It wasn’t a simple task, emotionally or logistically, to clear out offices and bid farewell to Russian colleagues and clients. But they did. Most global law firms didn’t want to look as if they were reluctant to take a stand when it came to choosing between Russia and Ukraine.
China vs. Taiwan is another story. Can we expect a similar response from international law firms or Fortune 500 companies if China’s war games go further than they have in the past few days? After U.S. Speaker of the House Nancy Pelosi visited Taiwan last week, China started firing off missiles that hit the seas around Taiwan and near Japan. There’s no doubt that China saw Pelosi’s visit to Taiwan, which it considers Chinese territory, as a major affront. But is China’s president, Xi Jinping, just saber-rattling to show his strength to the world and to his own people as he prepares to assume a third term later this year—even amid domestic tensions as China’s economy slows? Or, does he mean business, believing now is the time to “unify” Taiwan and China as he has promised?
Some global firms have offices in Taiwan. A lot more have offices in China, where multinationals have made huge investments. And law firms and their clients continue to cling to the idea that there is money to be made in China—a view that has influenced the relationship between China and the West for centuries. So, as those contingency plans are reviewed for the second time this year, law firms will once again discuss and debate their role when it comes to geopolitics and whether—or when—it’s appropriate for them to take a stand.
Fittingly, Law.com International recently surveyed more than 30 law firms, and in a story published last week, highlighted the sectors in which firms say they are now more likely to decline certain mandates in light of the increased focus on environmental, social and governance (ESG) issues, as well as reputational fallout from acting for certain clients. China was not named in the survey, but firms did say they have consistently turned down clients or matters tied to human rights abuses, environmental and energy issues, and of course, Russia.
Sometimes the best way to find out what law firm management is up to—or up against—is to talk to mid-level associates. That’s just what Law.com did, publishing its annual mid-level associate survey, asking midlevels a variety of open-ended questions about their law firms, the legal profession, and what they’d tell their managing partner if they could. Some of the comments were funny, some were serious. They all were eye-opening.
One Orrick Herrington & Sutcliffe associate, for example, said the firm shouldn’t take sides on big political issues at all. “Be a role model for all, not just the loudest voices,” the associate wrote. In response to a question about what surprised the lawyers about working at their firm, an Alston & Bird associate said, “The open hypocrisy of corporate America, the double-speak. I am literally at the best law firm at this level of macroeconomics, and I am disgusted.” And demonstrating perhaps that the profit motive still trumps everything, a Kirkland and Ellis midlevel said “I used to think that I was the most money-hungry person out there, but working at Kirkland has made me realize that, as much as I love money, there are A LOT of people that apparently love it more than I do.”
But some firms are taking stands much more than they did in the past. In Australia, the law firm Corrs Chambers Westgarth demonstrated a willingness to terminate a relationship with a long-standing client when it said it would no longer represent the Catholic Church on lawsuits related to historic sexual abuse. In response, the Archdiocese of Sydney announced last week that it would “cease all engagement” with Corrs, noting that it wanted to engage a firm “that understands and is willing to partner with the Archdiocese in all aspects of our extensive ministry.” The firm is not saying how much money it lost by pulling out but it is believed to be at least several million dollars. And who gets that money now? The Catholic Archdiocese of Sydney has hired Dentons.
Geopolitics is impacting corporations and their counsel in other parts of the world as well. In Latin America, leftist leaders have been getting elected in a resurgence of a “pink tide.” Colombian lawyers are the most recent group preparing for change, as Gustavo Petro, a former leftist guerrilla, was sworn in as president on Sunday. He is the first leftist to govern Colombia, which has recently been a hotbed of cross-border corporate work for global lawyers. Wealthy Colombians have been stashing money in the U.S., but José Luis Suárez, managing partner of the elite Colombian law firm Gómez-Pinzón Abogados, told Law.com International he is optimistic that legal work will continue to flow and that the new government will be good for the country.
Holland & Knight doesn’t want to miss any of that work. Last week, it announced that it has brought on a four-person natural resources team, who will join the existing team of two partners, a senior counsel, and 15 associates. They want to be ready if the new president acts on his pledge to halt new oil exploration, fracking projects, and possibly open-pit mining.
Lawyers in Chile are also expecting big changes after the country elected a young, leftist protest leader as president in late 2021. U.K.-based Clyde & Co has decided it’s time to establish a permanent presence in the country, launching through a merger with two local firms. The new firm, to be called Clyde & Co Chile, will have 11 local partners who will lead a team of 40 lawyers.
Law firms in other regions have been expanding as well as they look for new avenues of growth. Last week, Washington-headquartered Arnold & Porter Kaye Scholer hired two new partners and launched an office in the Netherlands—its third office in continental Europe. Eversheds Sutherland announced it is opening in Frankfurt—its fifth office in Germany, hiring the managing partner for Germany of PwC Legal to head the new office. In addition, Baker McKenzie expanded in Brussels with a three-lawyer team.
For Freshfields Bruckhaus Deringer, expansion over the past year has focused on the U.S.—the world’s largest legal market but also one that is super competitive. And that push has paid off, according to the firm. Global managing partner Alan Mason told Law.com International that the U.S. was behind “a significant portion” of its 10% revenue growth in the 2021-22 financial year. “Our objective is to be at the top of the market in the U.S., like we are in Europe and Asia,” he said.
But Freshfields doesn’t want to be known as a U.K. firm, or even as a Magic Circle firm—a tag given to the most elite London-based firms. In fact, none of the five wants to be branded as such—especially in Asia. They say the “Magic Circle” brand works against the firms’ ambitions to be seen as global law firms—both as they push to break into the U.S. market and expand in Asia.
In Asia in particular, as firms contend with a myriad of geopolitical pressures and a shifting market, most are looking to grow more in Southeast Asia, and some in China. And why not? Clifford Chance, which has five offices in Asia and two offices in Australia, reported that 17% of its global revenue this past year came from its Asia Pacific operations. Linklaters told Law.com International that its Asia contribution to revenue accounted for more than 15%. And as more and more of their existing and potential clients move parts of their business out of Hong Kong and China, and investors increasingly look to Southeast Asia for investment opportunities, the legal sector is following the money, boosting head counts in their Singapore offices.
Sometimes, risks faced by international law firms are not prompted by external factors. Not to be missed from last week are the Law.com International stories about Dechert’s former head of white-collar crime Neil Gerrard. Deputy editor Krishnan Nair took an in-depth look at Gerrard, showing how the way he ran his department, his relationship with his peers and his clients went to the heart of the many controversies that have exposed the Philadelphia law firm to reputational and financial risk. Last week, Dechert agreed to pay £20 million in interim costs to the ENRC to settle a decade-long case that involved Gerrard.
Finally, for a bit of inspiration and to restore the belief that there are lawyers out there who make a difference and stand for something other than the bottom line, read the obituaries of Canadian civil rights lawyer Clayton Ruby and of Alvin Yeo, senior partner and co-founder of the top Singaporean firm WongPartnership.