Monthly Archives: November 2011

Update on Brazil: Protectionism Gains Favor

Last month we wrote about the importance of Brazil to many international law firms and why the country has much to offer these firms and their corporate clients.  We also discussed challenges in the Brazilian market, in particular, the limitations on foreign firms preventing them from practicing locally, which is why many firms have entered the market through an association with a Brazilian law firm.  These types of associations might now be in jeopardy according to a recent vote by the Brazilian Bar Association (OAB).

Latin Lawyer (subscription required), is reporting that at the OAB national conference last week, “Brazilian lawyers have voted in favour of maintaining the strict regulation against any type of formal alliance with international firms.”  Three motions passed unanimously in favor of the strict interpretation of the OAB rule which regulates international associations. 

 [The] three motions were: that according to Brazilian rules, it is not permitted to have any type of association between individual lawyers or law firms, and consultants or groups of consultants in foreign law; that looser partnerships between local and international lawyers, to share experience and to serve clients within a global context, are permitted; and that also allowed are associations which are scientific or cultural in nature.

According to the rules of the conference, the OAB’s Federal Council must now form a commission to consider the motions passed.  The OAB will meet in December, according to Cezar Britto, the president of the OAB’s Commission on International Relations, “to regulate and discipline existing cross-border associations, and to give more clarity to the rules.”

 Posted by Marianne Purzycki

We’ll be back next week!

The blog will return next week, as well as Hildebrandt Headlines which is on hiatus because of the holiday.  All of us here at the Hildebrandt Institute wish our readers a Happy Thanksgiving!

Posted by Marianne Purzycki

Are Law Schools “Allergic to the Practical”?

We’ve written before about legal education reform as well as the “first-year dilemma,” the thorny issue of how to train new associates to become good lawyers while clients are objecting to those same associates staffing their matters for as much as $300 an hour.  All of which is really asking, “Why don’t they teach this stuff in law schools?”

A front-page article in this week’s Sunday New York Times has raised the question again, but shines some light on a couple of additional points.  The author, David Segal, writes that “Law schools have long emphasized the theoretical over the useful” and that “[p]rofessors are rewarded for chin-stroking scholarship.”  While many schools have used legal clinics as a way to provide practical training, the nuts-and-bolts practice of law is something that many law school professors know little about. 

“The fundamental issue is that law schools are producing people who are not capable of being counselors,” says Jeffrey W. Carr, the general counsel of FMC Technologies, a Houston company that makes oil drilling equipment. “They are lawyers in the sense that they have law degrees, but they aren’t ready to be a provider of services.”

Segal argues that the upper echelon of the legal academy is valued more for its volume of law review articles than real world experience.  There are more than 600 law reviews in the U.S., a number that has doubled since 1985, and they publish about 10,000 articles per year, few of which are considered noteworthy and citable.

Law school hiring also plays an important role, with schools chasing “superstars” that are often former Supreme Court clerks or candidates with both a J.D. and a Ph.D. in another discipline, such as economics.  And having no experience actually practicing law is perceived as an attractive quality.  Segal writes:

This might seem a paradox — experienced people need not apply — but the academy views seasoned pros with a certain suspicion. In fact, a number of veterans of legal practice who failed to land tenure-track jobs say that experience was a stigma they could not beat.

So what does this mean for recent graduates, many of whom have spent up to $150,000 to get their degree?  The legal landscape has changed in the last few years and there is not going to be a return to business as usual.  It’s a buyer’s market and the market is awash in JDs.  Big Law associate positions are fewer than they were a few years ago, while there appears to be increased demand for contract and staff attorneys.  To be successful, according to Segal, law school graduates will need “entrepreneurial skills, management ability and some expertise in landing clients. They will need to know less about Contracts and more about contracts.”

Posted by Marianne Purzycki

Law Firm Mergers Update: 2011 to Finish Strong

 As we reported back in September, the Hildebrandt Institute tracked nine completed mergers involving U.S. firms in the third quarter of 2011, bringing the total for the first three-quarters of the year to 31 – a 55% increase over the same time period in 2010.

And it looks like 2011 is also going to finish on a strong note.  Our tracking to date indicates 11 mergers to be completed in the last quarter of the year, bringing the current total for 2011 to 42 mergers. This is significantly higher than the 27 mergers of 2010, but certainly not back to the pre-economic crisis glory days, which routinely saw 50+ mergers a year. 

Similar to what we have seen all year, a number of the combinations are regional in nature, such as the recently announced merger between 300-lawyer Taft Stettinius & Hollister, based in Cincinnati, with Columbus, Ohio’s 30-lawyer Chester Willcox & Saxbe (effective Jan. 2), and Jones Walker’s combination with Mississippi’s Watkins Ludlam which went live on November 5. 

In addition, five mergers have been announced that will be completed in early 2012. The largest combination is between Faegre & Benson and Baker & Daniels, which will begin operating as Faegre Baker Daniels on January 1 with a total of 815 lawyers and consultants.

The big news, however, is still around significant tie-ups outside the U.S., in particular, cross-border mergers, which continue to be fueled by strategies focused on energy and natural resources.  Norton Rose Group will combine with Canadian law firm Macleod Dixon on January 1, creating an international legal practice with more than 2,900 lawyers, including more than 200 energy lawyers and more than 200 mining lawyers worldwide.  In addition, the U.K.’s Ashurst and Australia’s Blake Dawson announced plans to combine their businesses in Asia by March 2012 with a full merger, conditional on a further vote of the partnerships, by 2014. 

We’ll give a full report in our MergerWatch update at the end of year.

Posted by Marianne Purzycki

Client Satisfaction Up in the U.K.; U.S.-based Firms Lead Rankings

Client satisfaction is up among the 1,069 companies surveyed by Legal Week Intelligence for the eighth annual Client Satisfaction Report.  The companies, which include 78% of FTSE 100, reported the highest levels of satisfaction with the quality of legal advice, service delivery and responsiveness.  Respondents reported the lowest levels of satisfaction with cost and billing practices, reflecting what appears to be a trend toward increased pricing pressure in the legal industry.

The survey ranks major law firms operating in the U.K. based on criteria that also include use of IT and knowledge management, personal and partner relationships.  Interestingly, two U.S.-based firms topped the satisfaction rankings despite the focus on U.K. companies – Weil Gotshal & Manges and Reed Smith earned average scores of 8.6 and 8.41 out of 10, respectively.  The third highest ranked firm, Hogan Lovells, also has strong U.S. roots.  The top group was rounded out by U.K. firms Linklaters, Ashurst, Norton Rose and Clifford Chance.

Although Legal Week is not currently reporting the scores for all firms (the full report will be released in December), it appears that average scores for this top group are tightly clustered.    And both Weil Gotshal and Reed Smith have significant U.K. presences – London is Weil Gotshal’s second-largest office, and Reed Smith’s largest market presence is in London.  So the story here may be less about the prominence of U.S. firms and more about the decreasing relevance of national origin for certain global firms in major markets.

Posted by Emily Fisher