The partners at Chicago-based global law firm Baker & McKenzie are prepared to discuss just about any subject, but the one word they don’t like to hear is ‘franchise’.
The global law firm has spent years battling against the perception that its international footprint is the legal practice equivalent of McDonalds or Starbucks. Or perhaps not battling so much as quietly resenting the term – as the firm has historically engaged infrequently with the professional or international mainstream media to counter that impression.
But that approach is changing. Bakers – which effectively wrote the book on international practice, becoming a global firm when the idea of an overseas office wasn’t even a glint in the eye of most of its current competition – is opening itself up to the media and, more importantly, to clients.
The firm’s international pedigree is well established: it opened its first overseas office in 1955 in Venezuela, just six years after the practice itself launched in the Windy City; the following year it opened in Brussels.
The firm currently has 69 offices, with lawyers and staff drawn from 60 nationalities. Its 3,800 lawyers generated revenues of some $2.27 billion last year.
But behind the figures, the firm is pushing to create a personality that for so many years commentators have denied it possessed. Its recent Europe, Middle East and Africa region partnership meeting was the latest in a line of client-engagement efforts that the firm reckons makes it stand out in global legal practice. In addition to 443 of the firm’s partners gathering in Madrid, 124 individuals from 35 client companies also squeezed into the three-day event. 
Typifying the international nature of the firm – which now has far more non-American partners than those with US passports – are members of its top team. Chairman Eduardo Leite is Brazilian and Belgian partner Koen Vanhaerents is chairman of the firm’s European regional council. Both are enthusiastic proponents of Baker’s refreshed approach.

Historically, global law firms – indeed law firms of all kinds – would have run a mile from engaging their clients in any form of feedback, let alone inviting scores of their representatives to annual partnership meetings. Even today, your approach is rare if not unique. Why do you do it?

Eduardo Leite We have invited clients to these meetings for as long as I can remember. It has not been as organised and efficient as it is today, but back in 1978, the annual meeting was in Rio de Janeiro and I met a client who had the idea of coming to our annual meeting because it was a way of having all the partners from all the offices with whom that client worked available to go over issues.
It started on an informal basis, but, over the past 15 years, starting with [the now managing director of the IMF] Christine Legarde’s chairmanship, we began to do it in an organised and efficient way.
Sometimes clients – who are mostly general counsel – bring other colleagues with them, someone from finance for example. Last year in Beijing a client brought eight colleagues, including staff from the operational side.
We have a group of clients that uses us in more than 10 offices and that makes our relationship with them very institutional. These are the clients we invite to the meeting, as well as others that we view as growing and who have potential. And we also look at some clients that are not yet significantly revenue generating, but who have the strong potential to become so. For example, we are currently seeing many clients from the emerging world doing business in Europe, buying assets and brands in the established economies.

How do you involve the clients in the conference?

EL We ask: what is the agenda you want to have? What are the issues? In which countries are you planning to do business and what are the challenges you are facing? Clients tell us about their strategies and they tell us how we are doing. It is incredibly useful for us and for them. Having clients attend these meetings is good because it changes the mindset of our lawyers. We get under the skin of the commercial issues of the clients. We learn a lot from them.
For example, at this meeting we’ve had a speech from the chief executive of a major multinational, very successful Spanish corporation. He told us about the company’s strategy and vision, which fits exactly with what we try to do as a law firm. He said that everyone in his industry starts with designing products before then looking at distribution channels and finally marketing to the customers. His company has turned that model upside down; they start by listening to the customers, then they decide what they want to give them and lastly they end up with a design.
We are trying to adopt that approach as a law firm. We want to get out of the traditional modes – we want to be a firm that goes beyond being client focussed to being client driven; let the clients drive our strategy, our investment and our resource allocation.

Nonetheless, these meetings must have had an added frisson in the light of the global financial crisis. Are you experiencing increased pressure from client general counsel around fees and billing structures?

EL It has been very noticeable, starting in 2008-09, and it is still noticeable. Clients want creativity, they want alternative fee arrangements, they want value for money, they want more senior people working on their matters rather than a bunch of juniors. But it varies from region to region and jurisdiction to jurisdiction, depending on the degree of evolution of the practice and the client.
Also, GCs are closer to the business than they were 10 or even five years ago. They play a different role and are more demanding – not only regarding pricing but also in relation to our overall role with them.
Regarding pricing we’ve done a lot, however. Firstly, for the past 11 years, we’ve had our own outsourcing facility in the Philippines. There are 550 people there who are all Baker & McKenzie employees – insourcing, in other words. We also use three legal process outsourcing firms in India.
Also, about a year ago, we appointed a director of pricing – a non-lawyer who has a lot of specific knowledge who helps our teams to pitch more intelligently. We are pitching differently now than we have before. For example, we have a client who put out a request for proposal for 15 different fields of work. When the pitch had finished, the chairman of another law firm congratulated me saying that our team won because what we did was intelligent. We looked at the 15 areas and said to the client that we’re going to work on only nine because the other six are irrelevant if you solve these nine.
That experience teaches us that clients are not only concerned with price, but also with creativity and value for money.
We’ve also invested in teams of non-lawyer project managers. The key is to get closer to the projects – and as non-lawyers they see things that we don’t see. They don’t just manage the budget, they manage the deliverables – and we are expanding that team.
We need to understand what clients want – and in some cases, there are still those clients who prefer hourly rates. There are clients who say: ‘I don’t want any discounts – I want to pay the standard rates so that I feel that I can be demanding as I like and that you as the law firm have no interest in closing the deal or not’.
Do you have the impression that your competitors in the global law arena share your views regarding client relations?
EL There is a general acceptance among most of the global UK and US firms that we need to be more open to clients – and to measure better how to price our services. Each deal has its own particularities – there is no one size fits all. But there is a good trend among the profession towards being open and more creative.
There is fierce competition – some firms are really low-balling in terms of fees to gain market share. There will be consolidation in the law firm sector – indeed it is already happening. And not just in North America – we will see it even in the Asia-Pacific region.

The firm has a long-standing reputation for allowing its various offices to have their head. What are the benefits of taking that position?

EL The key is to allow the local units to have some flexibility and accountability for what happens locally. I don’t want to come to the Madrid office and tell them to paint the walls blue. One must respect diversity and local culture, because that is what clients value. For example, clients feel safe when they come to our Tokyo office and meet our Japanese managing partner, who speaks Japanese and knows who is who.
Here in Madrid, we had the mayor speaking to our clients, we also had the minister of finance – in the middle of all the problems Spain is currently experiencing – and we had the minister of industry, energy and tourism. Why is that? Because our Madrid office partners have the local connections – and that is key for a global firm.
Some global firms overlook that element – they set up their overseas offices simply to generate work for headquarters. It is a different strategy – it may not be wrong, but it is completely different from ours.

The large international law firms seem to be stampeding eastwards currently with all eyes on China and south-east Asia. Likewise, the emerging economies of India and Brazil are attracting attention. What does that mean for old Europe, especially in the light of several firms contracting on the continent? To what extent is there still good business to be had in Europe?

EL It is hard to say ‘Europe’ and to generalise. But if you look at the flow of foreign direct investment, and that is a good indication of where the work is going, the greatest proportion into the emerging world – China, Brazil, India – is coming from the US, UK and Europe. So we need to continue to be strong in those jurisdictions because of that flow. It is not just about the emerging world.
On the other hand, great companies from India, Latin America and China are buying assets and technology.
It is important to grow in a balanced way – it is an exaggeration to say the world is moving east and forget the rest. That would be the wrong strategy.

Koen Vanhaerents We have 2,000 lawyers and 30 offices in Europe, and we derive about 40 per cent of our annual revenue from this region – so we clearly don’t think the jurisdiction is finished.
The competition is still coming to this region. While there were some closures, there were also about 40 office openings in Europe over the past year. So the competition definitely sees potential here.
There is definitely a huge amount of work and Europe will remain a powerhouse of the worldwide economy. There are not a lot of companies that can afford to ignore Europe.
In addition, Europe is fairly diverse. While western Europe may be teetering on recession, central and eastern Europe are still growing at around 3-4 per cent annually, which is still OK.
We’ve also just opened in Turkey, a country that the International Monetary Fund is currently forecasting will have 9 per cent growth this year and next.
We see a lot of emerging market companies still coming to Europe, and that is a good area of business. So we remain optimistic about the business opportunities over the medium term in Europe.
And the fact that some competitors are retrenching in this market is not necessarily bad news for us.