Sqaure Mile

One can only assume that a sudden and dramatic convergence of legal systems around the world has taken place, bringing the word "globalisation" onto the lips of so many City lawyers.

Globalisation for the widget maker means selling widgets in world markets that are made in a number of countries. But for the legal profession it implies a substantial presence in all major international centres. By substantial I mean a presence able to provide a broad range of both domestic and international legal services for clients who are themselves global players in the business community.

But one cannot help but feel concern about the strategy, or lack of strategy, of many globalisation enthusiasts. Firms talk of entering a market because it will be fun and broad. Often their strategy includes statements suggesting that country A is not as high on the agenda as country B, bringing to mind images of Ernst Stavro Blofeld stroking his cat and talking of ruling the world.

From the international perspective, firms generally divide their services into three categories: advice, documentation and transaction management. The latter two are what global firms do well, as with advice on many common issues that arise in transnational business.

The global law firm must have a role here but is that role as wide and all-encompassing as many would believe?Privatisation and cross-border M&A work beckons but local regulation, litigation and an understanding of domestic bureaucratic processes are often the key to success.

Will the global firm be able to provide the same quality of service as the established and well-connected domestic firm? Major corporations have highly skilled in-house legal teams, the function of which is to identify the best service provider for that corporation in any circumstance. But unless the global firm can cover all the client corporation's needs, that corporation may choose the domestic firm, not least to avoid the risk of duplication of costs through referral back to head offices to cover gaps in the service.

To provide a first-class service in a number of countries is a mammoth task which requires substantial management and extensive resources. However, the growth in the use of IT may reduce the need for a substantial local presence, particularly if one wants to provide a similar type of service around the world. Indeed there is a danger for lawyers to believe that what works in country A can be used in country B.

Which brings us back to widgets. Manufacturers of widgets look for economies of scale. They look to the best locations for cost savings and quality control in which to produce the widgets. The widgets they make are the same in country A as in country B. Lawyers who believe that the services they provide can be structured and globalised in the same way as the manufacture of widgets may be in for a surprise.