India is about to open its legal market to foreign-based firms. This is not a sudden development; India was a signatory to the 1995 General Agreement on Trade in Services (GATS) treaty of the World Trade Organization that paved the way. And though there will be limitations governing foreign firms’ ability to set up legal practices in India—most notably they cannot engage in matters governed by Indian law nor can they appear in court—they can set up offices there and are free to partner with Indian lawyers/firms to circumvent the aforementioned proscriptions.
It’s a big deal. And there’s more than a bit of irony in the timing as a number of British firms still reeling from Brexit will be among the first in the queue to enter India. The British firms will be accompanied by a host of US firms as well as entrants from around the globe. No doubt India will become a crowded field for law firms seeking to tap into its large market. It will be a crowded passage to India.
And that begs the question: will “the usual suspects” be rushing to establish beachheads in India or will the response be more individuated?
Following the Herd
Most law firms have a herd mentality. They have virtually identical structures, lawyer pedigrees, websites, service offerings, claims of “partnering” with clients, “cutting-edge technology,” “value driven,” etc. But are they really differentiated as firms? Not really-with few exceptions. Sure, there are a handful of firms known for excellence in particular practice areas (Wachtell, Quinn Emanuel, and Cravath, for example) or for “superstar” lawyers. But most large firms are remarkably undifferentiated. And they tend to respond more to other firms rather than to clients.
A recent example is Cravath’s much ballyhooed $180K starting salary. Eye-raising as that is-especially in the current market-it could be seen as Cravath’s way of saying, “We’re Cravath and we are different.” But even more remarkable is that about one hundred other firms quickly matched or eclipsed Cravath’s raises. How does one explain this? One answer: herd mentality–“if we can pay top-of-the-market salaries to starting associates, we must be a top-tier firm.” Another variation on that misguided theme: “If we don’t pay top dollar, we won’t be perceived as being top-tier.” Really?
There are many other examples of law’s version of “keeping up with the Joneses”-or is it the Kardashians? The “bigger is better” firm philosophy–framed as “meeting the global needs of our clients”–has propelled many firms to open offices across the globe. And this may be a driver for why many firms will soon be opening shop in India. But before doing so, they might want to ask: “Will an India presence advance the interests of our clients and/or position us to better expand our client base by providing a differentiated service or product?” That is a firm-specific question, of course.
The point is that “one-size fits all” no longer applies to law firm efforts to sell. They would be well advised to reappraise their identity, direction, and differentiated capabilities. Oh, and they should focus on the client perspective.
For decades, law firms did not have to worry much about market positioning or specialized capabilities. Who needed differentiation when everyone was prospering? There was plenty of work to go around, no “outside” (read: non-law firm) competition, and clients were paying bills with little grousing and no discounting. Legal delivery was solely about selling legal expertise, and law firms had cornered the supply side of the market.
Many firms morphed from small, collegial groups of practitioners in a single location into large, geographically disbursed, aggregated brands. A handful of firms had specialized practice areas and a lone office, but most became “big box stores”-full-service firms operating from multiple locations under a unified brand. The core differentiators of the original firm were often lost in its rapid growth. But again, it did not matter-until the market changed.
Clients have a different approach to buying legal services now. It’s no longer solely a “relationship” driven process. Instead, its one where buying decisions are based upon: specialized expertise, technological and process efficiency, transparency, disaggregated options, value, and price. Procurement participates in many buying decisions; it’s no longer exclusively lawyer selling to lawyer. And, of course, law firms have plenty of competition from in-house departments, service providers, and diversified professional service organizations (such as the Big Four) that are more tech savvy, process driven, corporatized, and cost-effective than law firms. They also have deeper war chests and invest in technology and process that creates client value.
What does this all mean? The days of law firms flourishing as undifferentiated full-service providers are over. Law firms must take stock and ask themselves, “What do we want to be when we grow up and how can we differentiate ourselves from other firms and service providers?” Firms should also determine what tasks they have the expertise and price points to compete for and when, with whom, and how they might collaborate with other providers to integrate and streamline delivery. Collaboration – once unthinkable- is now becoming a mandate. Some prominent firms are engaged in collaborative efforts with service providers including: Allen & Overy (Deloitte), DLA (Lawyers on Demand), and Quinn Emanuel (Gerchen Keller Capital). Smart firms recognize they cannot be “all things to all clients.”
The imminent green light for foreign firms into India’s market will be a bellwether of firm behavior. The impulse to follow the herd into the new frontier will be great. But smart firms will take a long hard look at who they are, what differentiated services-or products- they have to offer, and how they can best service their clients before making the passage to India. Circumspection, differentiated offerings, and creative collaboration might be the best moves of all.
This post is also published in Law 360.