A recent article by Alex Berry in LegalWeek detailed another new law firm marketing collaboration involving London-based DAC Beachcroft (DACB) and Hong Kong headquartered Oldham Li & Nie (OLN). As Berry reported, DACB is an international law firm with approximately 1,400 lawyers in the EU, Asia-Pacific region, Latin America and North America. Oldham Li & Nie has approximately 40 lawyers in two offices in Hong Kong and Shanghai. LegalWeek further reported that DACB has recently entered other similar alliances with firms in Latin America, Europe and the United States.
In recent years law firm marketing alliances have come into focus as firms seek to bolster their ability to generate more new work internationally. What firms should consider when contemplating these alliances, however, are the prime challenges these alliances create when they begin. These challenges, if not adequately considered and addressed before an alliance is agreed, could lead to an unsuccessful alliance.
Writing about a law firm marketing alliance in 2014 between Bird & Bird and HMP, Yun Kriegler, International Editor at The Lawyer, explained: “It is a well-known fact that making strategic alliances work can sometimes not be a very a smooth sail, not least because in the long-term there is no aligned economic interest.” Kriegler also cited a decade-long joint venture between Linklaters and Singapore’s Allen & Gledhill which fell apart. In a detailed article in 2015 citing Kriegler’s analysis, I explained what law firms should do to win more work from an international law firm alliance. In 2017 I detailed 12 things firms should consider before joining a law firm alliance, which are similar in nature to law firm marketing alliances. And in 2015, I detailed what firms should consider before joining a Swiss-Verein merger, also similar to law firm marketing alliances.
Before joining any joint law firm marketing alliance, firms should be aware that they will immediately lose referrals from firms in regions where your new alliance partner operates. And if your alliance partner (particular the larger firm) does not have a very good business development initiative in place to quickly produce new referrals and new business, the alliance may not be worthwhile. Here’s more specific analysis of these two considerations:
Loss of referrals – I was interviewed in 2015 by Law360 about the Dentons-Dacheng Swiss Verein merger. What I explained to Law360 applies equally to law firm marketing alliances: As a result of the merger, Dentons will lose some long-standing business referral partners in China, and Dacheng will lose some referral partners overseas because suddenly those partners will become competitors. “A concerted effort will need to be made by the newly merged firm to accelerate cross-referrals between Dacheng and Dentons to make up for these losses, [and] then also seek to integrate the firms’ respective practices, business operations and finances, prospectively,” I explained. In the case of small regional or city-specific law firms merging with large global law firms – if you enter an alliance that is exclusive in nature, you will automatically lose referrals from jurisdictions where your new alliance partner has offices. So before entering any alliance of this kind, think carefully about whether you can lose referrals from firms whom you’ve perhaps had decades-long relationships with.
Lack of informed and proactive business development efforts — In order to effectively build an effective marketing tie-up with another firm, it is not enough to simply establish a relationship and “hope” your new partner refers business to you (however attractive the tie-up may appear in theory). Both firms must take a proactive approach to business development as a part of their firm culture and the joint alliance business development efforts in particular. Both firms must commit to regularly identifying and pursuing outstanding leads they are developing for one another. In order to do this most effectively, large international firms need to have internal staff in place capable of performing all these tasks (from research and identification to pursuit and capture of new business – whether from existing or new potential clients).
Small firms entering alliances with large firms are essentially tying their fortunes to the level of sophistication of the business development and marketing operations of the new, larger alliance law firm. Consider carefully whether it might be better to maintain a non-exclusive alliance in order to see results from joint-efforts with numerous firms before committing to one firm.
Independence or Alliance?
Small law firms in particular should be careful when considering whether to enter international law firm alliances. Given the loss of referrals and business development challenges these tie-ups create, it may be better to improve existing marketing and business development initiatives instead.
If you would like to learn more about how you can optimize membership in an international law alliance, please see our services page for more information and to arrange a discussion.