We sat down with Paul Rawlinson, global chair of Baker McKenzie, and Gary Seib, Asia Pacific chair and a member of the firm’s global executive, to discuss the firm’s strategy in Asia and globally.
ASIAN-MENA COUNSEL: Paul, you took up the chairman role in October and have been busy visiting offices and clients throughout the network. What is your vision for the Asia region?
Rawlinson: Asia is, in many senses, the jewel in the crown for Baker McKenzie because of our pre-eminent status in a number of the markets here, coupled with the generation of new client opportunities coming out of China and in the region generally. So this is a great market for us, not just in Asia itself but for the whole firm. And having the operation in the Shanghai free trade zone has really catapulted that as well, so that we now offer the full piece.
It’s a very interesting time to have such an established and successful practice here in Asia Pacific. I know many of our competitors would love to have something similar, but the cost of any of them even coming close to what we have created would be very high.
Seib: During this past financial year Asia was the region with the strongest revenue growth in the firm, which is a good news story for Baker McKenzie. I get excited by the opportunities in this region because we’re on the doorstep of some of the most dynamic markets — China, Asean, India, plus Japan outbound, which has been a very strong area for us. We’ve been in the region for 50 years. We have strong revenues, depth in our markets and depth in terms of our industry and sector focuses.
We keep a close eye on the flows globally and through this region, and while there is some short-term uncertainty given the current environment it’s not having a material impact on deals at the moment.
AMC: Indeed. Donald Trump did plenty of China bashing on the campaign trail and we saw some reaction against Chinese acquisitions in Europe last year, and then there’s Brexit. But you don’t yet see this affecting deal activity?
Rawlinson: Our M&A forecast report published with Oxford Economics in January is pretty positive overall. Far from suggesting a big downturn in 2017, it forecasts about the same level of global M&A, which is a key metric for what we’re doing, and then an up-tick again in 2018, so the horizon looks good and it’s broad-based. Obviously, Asia is still a strong market, particularly with new clients and new entrants, but the eurozone is still showing reasonable growth in the circumstances and North American domestic corporate activity has certainly held steady.
On China outbound, I think people need to tell a better story. The track record of the outbound deals they’ve done is positive. It’s not at all the scenario of taking all the knowhow back home — Chinese acquirers have been successful in growing the companies that they’ve acquired, probably more so than acquirers from other countries.
Seib: I’d also say that some of those decisions have been very deal specific, so it’s not really a policy around China as such. It’s a policy around local industry or issues that arise from a particular acquisition or proposal, which happens in every country.
AMC: China’s One Belt, One Road policy is clearly another potential driver of activity.
Rawlinson: Yes, One Belt, One Road presents a lot of opportunity for our clients not just in China but throughout this region. Everyone’s got a stat for their organisations and ours is that we’re in 28 countries along the One Belt, One Road avenue, so we’re well placed to service that.
Seib: There are things that are starting to happen and we expect to see more of that coming through. We’ve surveyed clients around Asean and something like 70% said they were gearing up for One Belt, One Road, so I think people see it quite positively and I don’t think it’s going to be impacted at all by some of these recent macro issues.
AMC: Gary, I understand that you asked partners in the region to sign on to a quality compact last year. What was the goal with that?
Seib: We recognise that to stay a strong brand we need to make sure that we keep delivering for our clients. On the technical side, black-letter law and quality lawyering is not an issue, and as Paul mentions we are a leader in so many of our markets here in this region. But where we see an opportunity is in terms of the delivery — the commerciality of our advice, responsiveness, consistency and also some internal factors around the way we manage work and people, so what we’ve developed in Asia-Pacific is a 10-point compact that goes into some relatively micro things.
AMC: How micro? Can you give an example?
Seib: One example is that we stay committed to start meetings on time. If we have a 1pm meeting, we start at 1pm. We have also made commitments about how we deliver: around the mentoring and supervision of our teams, for example. So, we’ve roadshowed the compact through our network here, 17 offices in 12 countries, and every partner has signed up to it.
Our clients tell us that what they really need in a multi-jurisdictional matter is consistency of delivery, so that remains a critical factor for our ability to deliver for our clients and we’ve just got to stay vigilant on it.
Rawlinson: We’ve got global client principals around this but what Gary’s describing is a particular booster programme for Asia Pacific that has been well received. Presenting a single client solution is what it’s all about these days and we’ve put a lot of work over the last 10 to 15 years around that. We’re also looking at our clients more strategically, with a global client service mandate. When it comes to delivering international advice across borders, that’s our DNA, that’s the normal client relationship.
Seib: One of the key things about Baker is that we grow organically. Of course, we have lateral hires and acquisitions and so on, but the story of our growth through this region and globally is really the story of one firm growing organically. It’s much easier when everyone is working from the same platform — with shared DNA, shared culture — than to try to bolt on different cultures and get them to work together, so we’re fortunate in that way.
AMC: One of the things we hear a lot from buyers of legal services, though probably not as much as you, is the imperative to “do more with less” and a general desire to get more value from external advisers. How are you responding to this changing client environment and the competitive pressures it brings?
Rawlinson: The challenge for us is to remain competitive for the kind of global, high-end work that our clients are doing, but also to deliver it in a way that, as you say, delivers more for less — and the way you do that is by driving efficiencies, so service delivery is something that we’ve spent a lot of time on. In this region we’ve had a Global Services Centre in Manila for a long time now, 15 years or more and more recently we’ve opened a similar operation in Belfast, which in my former role as London managing partner I played a role in getting up and running. We have 250 people now based in Northern Ireland, roughly half of whom are legal professionals, doing the more commodity end of a transaction or a piece of litigation. Interestingly, because they’ve been looking at things afresh as a relatively young function, it’s become a bit of a think tank for driving efficiencies generally through the organisation and re-engineering workflows, so as a result we’ve got smarter in this space and Belfast will be central to our commitment
AMC: Innovation is one of those words we hear a lot. What does it mean to you?
Rawlinson: It means a lot of things. In the short term, it’s about being as efficient as possible by deploying our various tools that we’ve already got. On a two- to three-year track it’s about starting to deploy machine learning and artificial intelligence, and we’re already testing some products. So there are various aspects to innovation but what we need to do, and I’m going to be piloting some projects in the next few months, is to get into the mindset of being an organisation that embraces change in the way we do work. I think that’s what clients want to see — they’re not really interested in how you’re doing it but the fact they’re getting a quality service and you’re investing in them rather than perpetuating a business model that they perceive as creaking at the seams.
Seib: For example, we are the biggest non-voice BPO [business process outsourcer] in Manila. We have a great team there with a new state-of-the-art site and even here in this region we also make strong and growing use of Belfast — we’ve had teams doing construction litigation in Melbourne, financial services investigations in Singapore, M&A transactions in China, all using the Belfast facility. It reduces the cost of delivery and increases the speed, so it’s just terrific.