A New King



Prince Charles, circa 1974, awaiting the throne. Will the right legal talent get anointed now for US/UK law firms working in Asia?

The arrival of a new prince at the Court of St‭. ‬James topped the news both in Asia and the West. This fresh, green dynastic shoot notwithstanding, the British royal family has become a story of missed opportunity – in a way that reminds me of what’s happening in Greater China with a number of the US/UK law firms.

But first, congratulations to William and Kate‭, ‬Princess of Cambridge‭, on their healthy boy, to whom we wish a long life. And bravo‬ Kate for staying thin through the pregnancy and immediately after‭ (‬oh the jeans on the Princess‭!). ‬However‭, ‬ this young family isn’t the reason for this blog post‭. ‬We are very happy for them‭. ‬We are however quite unhappy with Queen Elizabeth.

To be sure, she continues to conduct herself with grace and provides a bearing of dignity to her subjects‭.‬ My beef with‭ ‬the Queen has to do with her son‭, ‬Prince Charles, who is already a grandfather while his mother‭, ‬Queen Elizabeth, has been monarch for well over 50‭ ‬years‭. ‬ What more is she getting out of it that she hasn’t already gotten in spades? She mixes it up with her subjects less and less every year performing what is an ever narrower, more episodic ceremonial role‭. ‬

Prince Charles‭, on the other hand, ‬is still energetic‭, ‬if not at the peak he was in his 30s‭. ‬He’s been waiting with humility‭, ‬with dignity, and without making untoward comments‭. H‬e could readily step out of the palace every day and do what a monarch is supposed to: inspire‭, ‬motivate‭, ‬protect, and point to his subjects towards a higher pasture. Prince Charles would likely be a far more effective monarch than the Queen who‭, ‬given her age‭, ‬has a limited scope‭. ‬

But what’s most corrosive of all is that the longer Elizabeth reigns as monarch and the longer Prince Charles isn’t‭, ‬the weaker he becomes in the eyes of the British people and the weaker a king he’ll be‭. ‬This can still be fixed if the Queen resigns and publicly yields her loyalty to her son. The longer the Queen is queen the less support Prince Charles will have and the less stable the transition, and the less functional becomes the Windsor dynasty‭.‬

It’s time Queen Elizabeth resigned the throne‭. Do it for your people‬ and do it for your son. Let Charles be king‭!‬

This choking off of Prince Charles‭’ ‬blossoming reminds me how the new guard among US firms is being nurtured‭ (‬or not‭) ‬out of Beijing and Shanghai – particularly in the recently developed practice areas relevant to China‭, ‬namely outbound and high-end M&A and Projects / Project Finance‭.‬

Many US firms came to Hong Kong and then China in the mid to late 90s recognizing that eventually there would be a market for New York equity capital markets, but in the meantime their bread-and-butter would be foreign inbound direct investment.

This plan‭ more or less worked. Shortly after SARS‭, ‬equity capital‬ markets‭ (‬US Registered Offerings and 144As‭) ‬gained traction incrementally, with a robust uptick around 2007‭ ‬and then again 2011.

In the boom’s aftermath there’s a vast machinery of US ECM associates‭,‬ many of whom presently are not able to stay busy beyond 1,600‭ ‬hours per year. Because of sustained growth of capital markets in Greater China, a number of partners were made throughout the 10‭-year span: Some‬ of them are senior today and will likely to retire in 5‭ ‬years‭, ‬others in 10‭ ‬years, and others much longer thereafter‭. ‬

This deep bench of seasoned capital-markets partners among US firm would have been a positive development if deal flow had continued at the pace seen in 2007‭ ‬or 2011‭.‭ ‬It hasn’t – the flow today is about half‬ that of 2011‭. ‬

Moreover, building this cadre of now under-utilized capital-markets lawyers in Greater China was for US firms very costly. With a few exceptions, there are now regrets that after 10‭ ‬years, the investment came without ‭‭significant reward‭. ‬Looking back, knowing what they‬‬ know now, many firms ‭‭wouldn’t have invested this way‭. And most‬‬‬ corrosive and insidious of all is that the costs incurred fatigued many firms. Their scope has become narrower, they aren’t any longer thinking large‭, they’re no longer inspired‭.‬‬

That’s a pity, because there are signs that outbound M&A and Projects in the long term will yield far more value than has equity capital markets. And unlike capital markets‭, ‬these practice areas – with better realizations and rates‭ – ‬would also tap into other offices‭ – ‬ whether in SE Asia‭, ‬the Gulf‭, ‬Western Europe‭, ‬CIS and Russia‭,‬ the US, and Sao Paolo – benefiting parts of the firm beyond Asia‭. ‬

In addition‭,‬ these two practice areas are under-lawyered in HK and China at the partner level and there are fewer seasoned hands that can credibly execute the more complex deals.

A growing practice‭ that boasts stronger yields relative to capital‬ markets and benefits to other offices should be on the radar of law-firm management. It’s an opportunity worth exploring. And that means investing in the right kind of partners to build those practice areas‭. ‬

With the lingering bad taste from the push into capital markets, however, there seems little appetite just now to capitalize on the new opportunities. Firms aren’t investing in energetic‭, ‬capable partners who could step into the marketplace and mix it up. It’s just like what the Queen Mother isn’t doing, a monarch who seems to be in retirement without actually being so, taking up the room that would otherwise go to someone more energetic‭ – like a new king who would imbue Kensington‬ Palace with a new dynamism.


As Singapore becomes Naples


Singapore legal market hots up

More than a few Lamborghinis on the road – the sign of a Singapore legal-market traffic jam?

Early January, I visited Singapore. After a meeting near One Raffles Quay I had the mixed pleasure of waiting in a long line for a cab. The mixed part was the weather – Singapore even mid-January is relentlessly hot and humid, like New York in July. The pleasure was the parade of latest-model, beautiful cars. It was 5 PM, which meant there would be a wait for the cab but a guaranteed stream of stunning cars dropping off someone at the building, picking up a girlfriend or husband, or simply heading home. Drivers and passengers seemed on average not older than 45 (which explains the absence of Bentleys in the streets of Singapore), but the automotive tastes in evidence were at the highest pitch of sophistication. Their cars were wonderful to watch – from the sleek white Maserati with a white silver finish, to the always reliably beautiful red or yellow Ferrari, and the rare and riveting mustard Lamborghini.

As an Aston Martin glided by (whatever happened to that marque?) the guy next to me in line – a jovial Australian, it turns out – kept on saying: “It’s never been like this, so many people waiting for a cab – it’s never been like this.” He kept repeating that, as if perplexed, over the next 30 minutes as we advanced slowly through the queue. The Australian’s perplexity made his comment stick in my mind as I shifted gears from looking at beautiful cars to my other favorite subject – lawyers and law firms.

When I started in legal headhunting back in 1990 in New York, no one talked about Singapore or even Asia. By the mid 90s, as several US-based sponsors and developers became more involved overseas, Singapore was the first point on US law firms’ Asia compass. However by the late 90s, as those sponsors left Asia, Singapore receded. Japan, and the urgency to hire bengoshi, became the new horizon – until shortly after SARS around 2002, when China became the hot topic. By then Singapore seemed to have become a backwater or curiosity.

As the years passed and as China and India stimulated the global energy and natural-resources market, financed by Japanese banks, Singapore yet again twinkled. Slowly and quietly, the international offices there became increasingly busy, even under-lawyered. By 2010 and 2011 the secret was out: Singapore was busy and its three marque practices – energy/finance, M&A/PE, and arbitration – were a go-go.

The story with Singapore is complicated. On the one hand, it had been under-lawyered because law firms hadn’t replenished as associates or even partners left. And because the market that Singapore services is relatively small – mostly focused on Indonesia and India – any shortfalls in supply are quickly felt. Yet while business remained at 2011 levels – with the right amount of lawyers for the right amount of work – Singapore was something of a paradise.

Finally my turn came and I got my cab to the airport. The ticketing area at Changi on past visits seemed barely populated. Now it was packed, and for the second time in the same afternoon, I found myself waiting in a long line – this time for immigration (and without any beautiful cars to watch). An officer approached to check passports. My flight was about to board and I had to send emails beforehand, so I asked her about the wait. How she responded could be out of fiction but I swear it wasn’t: “It’s never been like this, so many travelers,” she said. “It’s never been like this.”

All of which is to say Singapore is getting crowded. A small market which got busy while it was under-lawyered may soon become very crowded and over-lawyered.

Not long after my visit, I received a link from a friend that’s going viral – about a Fiat maneuvering a narrow street in Naples. As I watched the video, I realized that Singapore could get this crowded soon. And while the Fiat comes out without a scratch, I fear that law firms, being bigger than a Fiat, may not be so lucky. Here’s the link for your enjoyment – it’s less than three minutes, and two of those minutes are pure Italian gold:

How to assess when and whether to go into a new market is a hard decision for law firms. Do it too early, and chances are funds will be invested with little return. But if a firm waits until the market is in full swing – especially for a smaller market like Singapore – chances are it’ll be already too late.

Not any one firm gets it right all the time in every office with every practice. It’s a question of striking the right balance – as the hapless driver of the Fiat was aiming to do – and success is a mix of luck and skill.

You can also bend it like Beckham



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He’s got the moves.

There’s been a curious trans-Atlantic migration of players out of European football (soccer) and onto US teams. It’s an instructive tale of talent, timing, and managing the trajectory of a career.

The typical soccer migrant I have in mind hails from Europe, especially from the English Premier League, and comes to join the US’s Major Soccer League (MSL). Names like Beckham, Henry, Keane, and Cahill illustrate. These were all European-based players coming close to signing their last contract when they jumped. While still competent, their value in the field was diminished by age, and by competition from younger, faster, less-expensive players. Those same pressures exist in the US, but at nowhere near the intensity as Europe. The upshot is that any good 32-year-old European player can assume a leading, superstar role in the US, creating a moment in the American sun when the European sky would otherwise have gone dim.

Something almost like the reverse has been taking place in Greater China recently – and, no, I’m not referring to Didier Drogba, the Ivoirian and former Chelsea star who now plays for Shanghai. I’m referring to several US practicing equity / capital-markets partners who arrived in Greater China over 10 years ago and enjoyed superstar status – as do Beckham and Henry in the US presently. These lawyers brought a unique skill-set enabling Asia companies successfully to tap into the US equity markets. Ten years ago they left New York or Northern California as very good lawyers – among many dozens of such very good lawyers. Moving to Greater China made them more or less alone in a market that demanded their services desperately, just as US soccer requires the likes of Beckham today.

After a very good run in China, these partners face a new migratory challenge when they return home. Coming back to the US after 10 or 15 years as stars in the Asian pitch is a less traveled road that’s hedged with uncertainty. It’s not clear whether the US market (whether New York or Northern California) can bear an influx of high-end US capital-markets talent. In particular, it’s not clear whether their own firms can successfully integrate these returning partners, whether they can build a practice that provides a business case for each of them. It must be a difficult time for those in this situation. Even though many of these lawyers are still at peak career age, they must feel like a 35-year-old player returning to Chelsea without a contract hoping, despite a deep bench of good younger players, that they can find a productive role on the team.

Yet in the face of disruptive change, most of us eventually find a way to land on our feet. Once we start this process, the old juices, the electricity which was there all along, floods the system and the machine starts working again. For these partners returning from China, that means a new practice in place, probably different though by no means of lesser quality, and a career that’s once more secured.

Thinking all this over, I found it all the more impressive hearing the news a few days ago that David Beckham would be leaving Los Angeles Galaxy and the MLS at the end of this season. At first it didn’t make sense: he and the Galaxy stand a chance to win their second title. Following on its heels, he could win a third next year, securing him a place in the pantheon of American soccer. Three straight MLS titles would give him a career ending that he couldn’t find anywhere else in the world. So why give this up for a new start with the Australian Football League?

Then I thought about Beckham and branding, and suddenly I got it. Beckham for sure built up a brand in Europe (there’s even a movie with his name in it, ‘Bend it like Beckham’) – a highly exposed brand that was even recognized in some circles in the US. Then he came to Los Angeles, on a very substantial package with different ways to generate revenue. For the last few years, in addition to bending shots and defying gravity, he’s become widely recognized without getting over-exposed. Beckham added substantial value to his name in the US which he didn’t have before. Now he’ll likely move to Australia and this 37-year-old will probably get another two years in the pitch, do some magic with both his feet, and build up name-recognition Down Under, in what’s a highly sports-oriented market. Once Beckham retires, his platform of retail goods will be all the wider and richer. The big question, however, is Why not China? Why not move to Shanghai or BJ and build the brand there? It would be a great question for Beckham’s next press conference.

Generally when lawyers think about moving laterally – whether from the US to Asia, or just from one firm to another in the same city – it’s because something’s ‘wrong’ with their current situation. Maybe the comp is too low, an office or firm doesn’t have a skill-set to build client relationships, there are personal issues, or the firm isn’t committed to Asia or a particular practice area. Therefore it’s a ‘reaction’ move, a response to something that isn’t working. Beckham’s move to Australia, however, is impressively proactive. He wants to build up his brand globally, beyond Europe and the US. From that brand-building perspective, moving laterally can be a way not just to fix a problem but a tool to build a bigger house yielding far more equity at the end of a career.

The hedgehog and the fox


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Focus or trickiness?

I’ve had almost 30 years to recover from the misfortune of taking a college degree in Philosophy. Still I feel an impulse to find in everyday life some manifestation of the abstractions I learned in school.

For instance, I tried very hard to find the underlying philosophical significance when Chelsea’s Fernando Torres – after years of being unloved in England – scored against Barcelona. Or when Manchester City’s Sergio Agüero won a well deserved championship after almost everyone had given up. I’ve had to conclude these were feats too grand and glorious to make their mark within philosophy’s fusty confines.

But on the subject of global law-firm strategy – seemingly beyond philosophy, like football – a famous philosophical metaphor strikes me as perfectly apt.

The question is ‘Which approach will win the day?’ – The Wall Street law-firm strategy of globally exporting essentially one type of product to a particular set of clients? Or the UK/City strategy of exporting a wide spectrum of loosely relevant products to a wide variety of clients in a wide variety of places?

Isaiah Berlin may have had something like this contrast in mind when he wrote ‘The Hedgehog and The Fox.’ On this schema, Wall Street firms would count as the hedgehog – focused on one big thing – while UK/City firms act more like the fox.

At present, it’s hard to say conclusively which has proven the better approach. I’m not even sure the word ‘approach’ reflects what UK firms do, as they don’t have much of a choice. Wall Street firms can live well enough on the US market alone. UK firms, if they want to bolster profitability, pretty much have to go outside of England, outside of Europe, and into the Asia.

Most people, based on visuals, may conclude that the Wall Street firms have the upper hand these days. There are almost no native Mandarin-speaking partners left at the major UK firms. However, as with Manchester City’s magical finish to the season, it’s just too early to tell who will win, hedgehog or fox.

As I’ve thought about different approaches to lawyering in Asia, I realize Berlin’s critterly contrast applies as well to search firms. Having been recruiting lawyers since around 1990, and beginning to focus in Asia in 1995, I’ve developed a specific approach. To switch to a culinary metaphor, that approach is not to throw a lot of spaghetti up to the ceiling and see what sticks, but rather look at the spaghetti, make sense of the entire meal, and determine the most suitable and delicious sauce. This is a slower process that requires more than rolling the dice. It frequently means putting one’s own interests on hold until the right mix is found. The hedgehog’s nature is more prone to keep the client’s interest front and center, to move deliberately on the client’s behalf, to act smartly with less movement more action. The hedgehog is introspective and checks what it does, making sure it works.

Headhunting as a hedgehog means representing not more than 5 or 6 law firms at any given time. That allows the hedgehog to look at the broadest possible spectrum of lawyers at other firms, the better to learn whether a particular candidate is the right candidate. (The fox, on the other hand, may want to represent a lot of firms, and by virtue of non-solicitation agreements, is left with a very narrow spectrum for seeking possible candidates.) The hedgehog’s natural deliberation helps to isolate the small moving pieces that together makes the whole – details often decisive to the overall success of placing a candidate.

For example, the phrase ‘portable business’ generates excitement, but it’s not an answer in itself so much as a cascade of new questions. Can the hiring firm execute those specific pieces of the new business well enough, at the same cost, and at the same realization? Moreover, what synergies can the new firm bring to the table to so that the incoming practice can multiply its volume at the same or higher realization? When that happens it’s electrifying, and the hedgehog smiles.

I write this blog delighted to have seen the Asia market mature in the last 15 years into a world-class lawyers’ market. Asia enjoys a bigger legal brain trust today than ever before. It’s no longer a backwater, and soon we’ll likely see law firms’ global standing made (or broken) because of Asia. With a market so developed and fine-tuned, mature, professional headhunting is called for. Recruiting at this level requires thoughtfulness and an intellectual architecture behind it more than hoping for the best, sounding good, and acting badly. Of course the hedgehog – for all his careful nature – can act badly. But bad behavior is easily spotted when the speed is deliberate.

I’m hopeful then that my colleagues will be worthy of their clients and contribute in some way in making Asia a world-class market. Not without some philosophical basis, I say ‘Go hedgehogs!’