News last week that Singapore-based RHTLaw Taylor Wessing (@) had bolstered its consulting practices underscores a trend that appears to be gaining significant pace in international legal markets. The RHT Group of Companies, which are wholly owned companies of RHTLaw Taylor Wessing LLP, now have consulting divisions ranging from corporate communications and digital media to real estate wealth management.
This Asia-Pacific Region legal markets initiative is not new, however. Last month, @E announced it will add consulting arm Agile to provide interim legal consultants to in-house legal teams on a flexible basis. And last year, the Singapore office of US-based law firm Mayer Brown launched an Asia trade consulting arm. According to a media release issued by the firm at the time, the consulting practice was established to “advise clients on a wide range of Asia-focused international trade matters including WTO issues, international trade policies, customs, export controls and anti-dumping investigations.”
Law firm consulting practices: A tried-and-tested method for success
Diversification of services into non-legal or quasi-legal consulting is already a tried and tested method for law firms to generate new revenue. International law firm Withers LLP (@), for example, set up a non-legal consulting practice, the Withers Consulting Group (WCG) in 2013, as the International Advisor reported at the time.
The District of Columbia Bar permits Washington, DC-based law firms to maintain hybrid law and lobbying practices together with non-lawyer professionals, for example. And these arrangements have proven to be extremely lucrative. And the trail has been blazed previously by accounting firms as well. The Withers practice is focused on strategic planning outside the realm of the strictly legal for families, business owners and entrepreneurs, and builds upon the firms’ already existing practice of legal services to that client base.
Clients want services diversification
Ian Busby, who leads the Open Innovation practice for the SETsquared Partnership (@) in the UK, recently outlined in Totum Blog (@) that: “client organisations are looking for ever-more relevant and integrated services from their advisors that drive process efficiency and enable change to be implemented more quickly.”
Why consulting practices are attractive for law firms
George Beaton (@), Partner in Australia’s Beaton Capital, provided insight into why law firms should diversify in an article published in late 2012 in the Financial Review. He noted, among other things, that: “Accountants are benefiting from diversifying their range of services, sectoral focus and geographic reach in a way that delivers them good upside and largely shields them from the vicissitudes of the economic cycle.” He outlined that “Non-legal practice offers in those law firms that have diversified include specialties in governance, risk, compliance, policy, regulatory affairs, procurement and commercialisation.”
And in an email interview for this article, Eva Bruch (@), Barcelona-based consultant to law firms on strategy outlined that: “Law firm growth via adding business consulting services seems to be a very attractive way to expand its portfolio and add value to the customer in a sustainable manner that creates a tangible and differentiating competitive advantage in the market.
The other way to achieve similar objectives is to super specialize in a legal area or create an entirely new one, just as Kenneth Grady brilliantly explained in this example about blockchains. This trend is also seen in Spain with firms, both in legal (Law Ecija Tech) and tax (Addvante) making efforts to develop business consulting services and technology solutions that actually, permits them to become the strategic partners of other law firms in hot issues such as Compliance in Spain right now.
The risks? not investing in the necessary talent and technologies; growing too fast via mergers without a cultural link; working as separate units not permitting the customer to leverage synergies …It’s a good opportunity whose main beneficiary is the customer, but is not as easy as simply “plug in” a consultancy division into the firm. It needs strategy.”
What might be next in Asia for law firm consulting divisions?
One of the most pronounced recent trends in the Asia-Pacific legal markets has been the massive boom in infrastructure construction and funding. Earlier this year China-led Asian-Infrastructure Investment Bank (AIIB) announced it would spend 100 Billion USD on Asia regional infrastructure needs. Japan followed closely on the heels of the China effort to announce its own Asia-focused effort worth 110 Billion USD.
As the Financial Times reported in 2011, Harvard University’s Center for International Development’s Government Procurement Survey reports that “worldwide Government Procurement of goods and services typically accounts for 10-15% of GDP for developed countries, and up to as much as 20% of GDP for developing countries.” Southeast Asia will experience an overall infrastructure boom which McKinsey & Company estimated in 2011 will be worth $8 trillion (USD) during the course of this decade.
US government procurement services are among a number of consulting efforts that sit alongside lawyers in Washington, DC. These services provide unique entree for the lawyers in DC firms to access those consulting clients and serve their legal needs after public procurement advisement has already been won by their consulting colleagues – or vice-versa. Asia-Pacific region law firms might also choose to adopt a consulting effort around helping companies identify and secure government-funded Asia regional infrastructure work.