Law firms as a business- Doubt

[futuretraineesolicitor]

Hello guys, hope you are doing well. I had a question about the business of law firms, I'd be grateful if you could please help me out with it. I wanted to know, why do firms that don't have a common profit pool open International offices. I mean if I were running Hogan Lovells London office (which I'm assuming does not share its profits with other international offices), why do I even care about those international offices existing. Do the the Hogan Lovells international offices function as franchises of the London office, and do they pay the franchise fee to the London office? Thanks in advance.

 

[Kubed]

Because on a fairly simple level, having offices abroad gives you access to those markets. You can run all of your business from a single office in London (as some firms do, with 'best friends' abroad) but if you want to develop a local presence, hire local experts and connect with local companies, you need to have an office in the markets you are interested in. Irrespective of whether it's a shared profit pool or not, the wider strategy and success of the company does not solely depend on whether an individual partner cares about an international presence - if it brings in work, there's money to be made.

 

[Jessica Booker]

Hello guys, hope you are doing well. I had a question about the business of law firms, I'd be grateful if you could please help me out with it. I wanted to know, why do firms that don't have a common profit pool open International offices. I mean if I were running Hogan Lovells London office (which I'm assuming does not share its profits with other international offices), why do I even care about those international offices existing. Do the the Hogan Lovells international offices function as franchises of the London office, and do they pay the franchise fee to the London office? Thanks in advance.

I don't know about HL specifically, but depending on the firm and how they structure themselves, they can work financially in any of the ways you have suggested. Some will be fully integrated and will split profits evenly, some will work on franchises, some work on regional hubs and for the profits to be split only within their hubs.

Whatever the model though, someone has thoughts about what works best for that firm and ultimately it is revenue and profit (both short and long term) that will determine which financial model a firm chooses.

 

[futuretraineesolicitor]

Because on a fairly simple level, having offices abroad gives you access to those markets. You can run all of your business from a single office in London (as some firms do, with 'best friends' abroad) but if you want to develop a local presence, hire local experts and connect with local companies, you need to have an office in the markets you are interested in. Irrespective of whether it's a shared profit pool or not, the wider strategy and success of the company does not solely depend on whether an individual partner cares about an international presence - if it brings in work, there's money to be made.

Thanks for the response @Kubed . Can I DM you for a question on similar lines? I don't want to overpopulate the forum.

 

[futuretraineesolicitor]

I don't know about HL specifically, but depending on the firm and how they structure themselves, they can work financially in any of the ways you have suggested. Some will be fully integrated and will split profits evenly, some will work on franchises, some work on regional hubs and for the profits to be split only within their hubs.

Whatever the model though, someone has thoughts about what works best for that firm and ultimately it is revenue and profit (both short and long term) that will determine which financial model a firm chooses.

Thank you for the answer.

 

[Kubed]

Thanks for the response @Kubed . Can I DM you for a question on similar lines? I don't want to overpopulate the forum.

Yes sure, I'll help if I can! It might be worth just posting it here though as others might benefit.

 

[futuretraineesolicitor]

Thanks @Kubed. To be honest, I think not a lot of people will have the same question but never mind. I really wanted to know more about concepts like the multi-jurisdictional aspect and the global nature of the role. I feel that I don't understand these concepts fully.

My first question is, why do people even want to work at a global law firm? Correct me if I'm wrong but a global law firm is one that has a lot of offices around the world and people who want to work at global law firms want to "play" with laws of different countries/jurisdictions sitting in London. This way, the work never gets boring since obviously the laws of each country are different + there are cultural differences that make negotiating key terms in dealmaking, very interesting! So, the crux is that, by working for a firm that can get you to work on matters from all over the world, you are buying a ticket to interesting work and cultural differences that play out in the deals, for a lifetime and this can't happen with firms that have just 2-3 offices around the world? (This might be entirely wrong but, as I said, I just feel like I have no clarity on this even though I have been into commercial law since a really long time)

Secondly, I don't think I understand the term "multi-jurisdictional" to be honest. If I am a company in London that is aiming for an IPO, I would only like UK qualified lawyers to be staffed on my IPO. Where do lawyers from other countries even come into the picture and as a client, why would I want a Dubai qualified lawyer to work on my London IPO? This probably never happens and my guess is that the Dubai lawyers would come into the picture if I am planning a listing in Dubai but why would I as a client, go to London law firms first and then expect the firm to appoint its Dubai lawyers on the matter, why can't I call up a Dubai law firm directly?

Thanks in advance and sorry if this was utterly stupid but I've had this question for quite some time now.

 

[Jessica Booker]

Thanks @Kubed. To be honest, I think not a lot of people will have the same question but never mind. I really wanted to know more about concepts like the multi-jurisdictional aspect and the global nature of the role. I feel that I don't understand these concepts fully.

My first question is, why do people even want to work at a global law firm? Correct me if I'm wrong but a global law firm is one that has a lot of offices around the world and people who want to work at global law firms want to "play" with laws of different countries/jurisdictions sitting in London. This way, the work never gets boring since obviously the laws of each country are different + there are cultural differences that make negotiating key terms in dealmaking, very interesting! So, the crux is that, by working for a firm that can get you to work on matters from all over the world, you are buying a ticket to interesting work and cultural differences that play out in the deals, for a lifetime and this can't happen with firms that have just 2-3 offices around the world? (This might be entirely wrong but, as I said, I just feel like I have no clarity on this even though I have been into commercial law since a really long time)

Secondly, I don't think I understand the term "multi-jurisdictional" to be honest. If I am a company in London that is aiming for an IPO, I would only like UK qualified lawyers to be staffed on my IPO. Where do lawyers from other countries even come into the picture and as a client, why would I want a Dubai qualified lawyer to work on my London IPO? This probably never happens and my guess is that the Dubai lawyers would come into the picture if I am planning a listing in Dubai but why would I as a client, go to London law firms first and then expect the firm to appoint its Dubai lawyers on the matter, why can't I call up a Dubai law firm directly?

Thanks in advance and sorry if this was utterly stupid but I've had this question for quite some time now.

The reality is you probably won’t be playing much with laws - you will just be advising on the laws you are qualified in. You will be relying on lawyers in other jurisdictions to advise on their local laws.

English law is used a lot as a jurisdiction in which deals/matters are written - hence why there are a lot of firms working from London. And that’s why many people want to qualify into England and Wales.

If the company that is being IPO’d has any operations or assets in the UAE, There is likely to still need to be some work done by lawyers in Dubai, even if the IPO is conducted in London under English law.

The reason multi jurisdictional work exists is because multi jurisdictional companies exist. You’d likely to be under some form of local law if you have operations or assets in countries, even if you want to conduct the main “transaction” or “matter” in London.

 

[futuretraineesolicitor]

This clarified a lot of things @Jessica Booker thanks a lot. Is there any reading material on this topic to further my understanding? I've tried looking it up but no luck! Jacob Miller had a fantastic primer on commercial law but unfortunately, it doesn't talk about Global work and the multi-jurisdictional aspect.

Thanks.

 

[Kubed]

Thanks @Kubed. To be honest, I think not a lot of people will have the same question but never mind. I really wanted to know more about concepts like the multi-jurisdictional aspect and the global nature of the role. I feel that I don't understand these concepts fully.

My first question is, why do people even want to work at a global law firm? Correct me if I'm wrong but a global law firm is one that has a lot of offices around the world and people who want to work at global law firms want to "play" with laws of different countries/jurisdictions sitting in London. This way, the work never gets boring since obviously the laws of each country are different + there are cultural differences that make negotiating key terms in dealmaking, very interesting! So, the crux is that, by working for a firm that can get you to work on matters from all over the world, you are buying a ticket to interesting work and cultural differences that play out in the deals, for a lifetime and this can't happen with firms that have just 2-3 offices around the world? (This might be entirely wrong but, as I said, I just feel like I have no clarity on this even though I have been into commercial law since a really long time)

Secondly, I don't think I understand the term "multi-jurisdictional" to be honest. If I am a company in London that is aiming for an IPO, I would only like UK qualified lawyers to be staffed on my IPO. Where do lawyers from other countries even come into the picture and as a client, why would I want a Dubai qualified lawyer to work on my London IPO? This probably never happens and my guess is that the Dubai lawyers would come into the picture if I am planning a listing in Dubai but why would I as a client, go to London law firms first and then expect the firm to appoint its Dubai lawyers on the matter, why can't I call up a Dubai law firm directly?

Thanks in advance and sorry if this was utterly stupid but I've had this question for quite some time now.

Not so much to add to what Jessica has said above really. In response to your first question - a global law firm doesn't always have lots of offices around the world although most probably do. It can be based in one jurisdiction but still work on international transactions/cases. Obviously there are a variety of motivations for people to work in a global firm - while you would only practice law in the jurisdiction you have qualified, you would have the opportunity to liaise with colleagues from across the world and therefore be exposed to different legal systems, ways of work etc. You also have the opportunity to potentially take part in international secondments that broaden your experiences and knowledge.

For your second question - lawyers from other jurisdictions won't always come into the picture. So the Dubai-qualified lawyer simply won't come into it in your example. But consider the situation for a massive global firm which operates in many countries - surely going to one firm that can support it wherever it operates is the most logical solution. The law firm will know what it does, how it operates etc.

Why would you go to a London law firm for an IPO in Dubai? It really comes back to my previous answer - who has the best experience and expertise in whatever I want to achieve? It may be a local firm or it may be a firm in London (which also operates in Dubai) that I happen to already have a relationship with and want to entrust the work to.

I would look at some examples of cross-jurisdictional work on law firm websites (e.g. https://www.bakermckenzie.com/en/newsroom/2021/06/equinix-joint-venture-with-gic) to get a better idea of what it might involve.

 

[futuretraineesolicitor]

Thank you so much for this answer @Kubed

 

[TC fiend]

This clarified a lot of things @Jessica Booker thanks a lot. Is there any reading material on this topic to further my understanding? I've tried looking it up but no luck! Jacob Miller had a fantastic primer on commercial law but unfortunately, it doesn't talk about Global work and the multi-jurisdictional aspect.

Thanks.

What your question really seems to touch on is the crux of international commercial litigation, more specifically the conflict of laws. What you need to know is that company A might want to list in the UK - this will be governed by English law. But it might also have offices in Dubai, Brussels and New York. The law that governs the work of those offices will be set out in the contracts those offices have, as well as established case law on what it means for a company to be “headquartered” somewhere. This is so companies (or any party) can’t do something called “forum shopping” - stating your agreements are governed by a certain law because that law is beneficial to you, even though you aren’t really connected to that country.

It’s really far more complicated than that but if you want a basic understanding I can recommend the book “Collier’s Conflict of Laws”.

 

[futuretraineesolicitor]

What your question really seems to touch on is the crux of international commercial litigation, more specifically the conflict of laws. What you need to know is that company A might want to list in the UK - this will be governed by English law. But it might also have offices in Dubai, Brussels and New York. The law that governs the work of those offices will be set out in the contracts those offices have, as well as established case law on what it means for a company to be “headquartered” somewhere. This is so companies (or any party) can’t do something called “forum shopping” - stating your agreements are governed by a certain law because that law is beneficial to you, even though you aren’t really connected to that country.

It’s really far more complicated than that but if you want a basic understanding I can recommend the book “Collier’s Conflict of Laws”.

Thank you so much for your answer.

 

[adkinskristi]

I resonate with what Kubed said. If you want to create a local presence in a particular country, opening that business in that country would be good. Indeed, this seems more complicated with law business, but with any business that wants to expand globally, this is a must. That is my plan for the next five years to expand in Europe. But at the moment, I'm trying to close the financial gap caused by the pandemic. And help came from https://factorforyou.com/illinois-factoring/ , which enables me to get paid faster for my work.