An increasing number of offshore law firms are expanding outside their home jurisdictions either organically or through mergers, creating pan-offshore law firms. This year is shaping up to be something of a watershed as the offshore law leaders battle for position.
Mourant du Feu & Jeune, for example, is opening a new office in Grand Cayman, with additional Cayman-specific support at its City of London office. Rather than taking a merger path, Mourant has chosen to establish a new presence with an established Cayman legal team, and will also offer associated administration services to match its Jersey model.
But it is not just firms from the ‘usual suspects’ of the offshore world (including Cayman, Bermuda, Guernsey and Jersey) that are venturing further afield. Some from onshore jurisdictions offering ‘offshore’-type work, including firms from Ireland, Luxembourg and the Netherlands, are also on the move.
Some would argue that the Organisation for Economic Co-operation and Development’s (OECD) and the Financial Action Task Force on Money Laundering’s (FATF) involvement with offshore centres has precipitated unprecedented regulatory similarity, and that offshore jurisdictions are hence moving towards a kind of consolidation. I would suggest not, since there are sufficient differences between key offshore and onshore jurisdictions to give them their unique selling points. It may be that a client considers a law firm first, rather than a specific jurisdiction, but the jurisdictions they work in are as vital a factor as ever.
Having the right level of representation in the key jurisdictions makes a law firm an attractive choice to multinational companies and private investors alike. This is because they can provide a one-stop shop for clients, offering equal expertise in each jurisdiction.
By opening up in another jurisdiction the firm can provide improved client service. Being in close proximity to clients ‘onshore’ in London, for example, is essential for business development and building client relations and, fundamentally, being on hand to close deals.
Satisfying referrers and intermediaries is also inextricably linked with satisfying the underlying client.
What has also changed is the size and complexity of the deals. The increased amount of work in funds, capital markets and corporate structuring has of necessity stretched the skills set of the existing offshore legal advisers. With structures and deals becoming ever more complex, and with many deals involving more than one key jurisdiction, it is a definite advantage if lawyers can provide a full solution in more than one jurisdiction.
Effective and meaningful expansion is therefore not about being larger than other firms. It is about being able to offer the right technical solutions to clients.
There is evidence that the major UK law firms want their offshore advisers to be the ones who recommend and service their deal through the best structure in the best possible jurisdiction. Such intermediaries may also detect a style or approach of an offshore firm they particularly like. The bigger offshore firms offer ongoing administration services to the structures they establish.
Many of the offshore ‘magic circle’ firms are banking on the existing strength of their established brand reputations carrying them into new jurisdictions on a wave of intermediary and client confidence. Ultimately, these reputations will either be enriched or diluted, dependent upon the quality of advice in these new markets; and a critical issue here is the extent to which they are forming new relationships with likeminded specialists. The risks increase significantly where they have been forced to marry a less than ideally matched ‘partner’.
It is easy to underestimate the knowledge a lawyer has of other offshore jurisdictions.
Just as a law firm’s competitors come in the form of other law firms, they also come in the form of other jurisdictions. And when it comes to jurisdictional expansion, the opening of an office in a new jurisdiction takes on the nature of a merger of sorts, with jurisdictional due diligence reaching new heights.
As a result, the major offshore law firms are often well placed to consult with regulators in different jurisdictions on how the jurisdiction’s offering could be improved.
There is a key question at the heart of the one-stop shop opportunity: do clients want a one-stop shop from a pan-offshore law firm, or do they want the firm in each jurisdiction that offers in-depth knowledge of that jurisdiction? The answer is that they want both – and they are not always mutually exclusive. The long-term challenge for all the firms playing at this level is to achieve sufficient strength in the right jurisdictions to be able to provide the kind of pan-offshore service that clients want.
The future seems, therefore, to be a matter of achieving and maintaining the right range and depth of specialist expertise, while developing client relationships and ensuring consistent brand development across the firm.
Tim Herbert is managing partner of Mourant du Feu & Jeune