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Message: <blockquote data-quote="Andrei Radu" data-source="post: 193543" data-attributes="member: 36777">So I think it is possible to write a good answer if you choose either option - what is key is to show off (i) your general capacity for commercial analysis as applied to the business of law firms; and (ii) your research and knowledge of OC's unique business. I will list bellow some of the considerations I think you could discuss in favour of each option.Option 1 - investment in international expansionPros:<ul> <li data-xf-list-type="ul">Legal expertise in multiple important jurisdictions is increasingly a key demand of clients working on cross-border mandates (which is why independent firms like Slaughter and May are reported to have encountered issues in operating their Best Friends models, and why the more conservative US white shoe firms are boosting investments in their London offices) so investing in this expansion is sound business strategy, allowing the firm to keep current clients and potentially win new ones.</li> <li data-xf-list-type="ul">By hiring people with expertise and established client books in another jurisdiction, a high number of those clients could come over to OC. This is good in and of itself, but if those clients operate internationally, as they often do, this will present opportunities for cross selling their other offices. Ultimately, it is an opportunity to win market share in the global big law industry. </li> <li data-xf-list-type="ul">Conversely, by not expanding, when doing cross border work for existing clients OC will have to at times delegate parts of the work to other law firms, which creates a risk of clients being poached later on by those firms. </li> <li data-xf-list-type="ul">As the success of the likes of Latham and Kirkland shows, or for a better comparison at the mid market level of the likes of DLA Piper and Baker McKenzie, scale is increasingly important. It creates opportunities for reducing costs (see analysis of general economies of scale as applied to services industries) and increases revenues, which gives firms more financial leeway and ability to invest. In a fast-moving legal marketplace that is an essential requirement for allowing firms to innovate and respond to challenges. For example, look at how aggressively Kirkland was able to respond to the Paul, Weiss raid. Such an event would have been catastrophic to a smaller sized rival, but for Kirkland it was a mere scratch - as they went on to replace the lost expertise with some equally high profile hires. </li> <li data-xf-list-type="ul">Finally, more larger international offices can be a form of diversification and hedging against risks affecting particular markets the firm is currently very reliant on. </li> </ul>Cons:<ul> <li data-xf-list-type="ul">While on the one side there has been an increase in client pressure for cross border expertise, that has been mainly focused on a small number of key locations in the US and Western Europe. Besides that, if anything, in the last two years we have seen a bit of a retreat from international investment, with a number of firm closing offices in other jurisdictions. </li> <li data-xf-list-type="ul">Offices in other jurisdictions (and really, beyond the US and London) can be highly dilutive of profit pools, as clients in other places are simply unwilling to pay as much in legal fees. This is arguably one reason why Slaughter and May has consistently been able to keep way ahead of its MC competitors in terms of average PEP. </li> <li data-xf-list-type="ul">Increased international presence can come with increased administrative difficulties and associates internal management costs. </li> </ul>Some advice:<ul> <li data-xf-list-type="ul">If you choose Option 1, to impress I would make sure to (i) name one or two existing offices that you think would benefit most from investment; (ii) make sure to explain why that is, focusing on mandates that the firm could work on there to service existing clients; (iii) try to analyse the state of the competition in this other market, seeing whether there is any way OC could gain an advantage to its competitors by expanding there. </li> </ul>Option 2 - investment in client service deliveryPros:<ul> <li data-xf-list-type="ul">Investment in OC Solutions would benefit the firm globally, as the improved tech could be implemented everywhere. As such, even if the added benefit in any particular office would not be as significant as if the firm invested in hiring practitioners to expand, the aggregate benefit for the entire firm could be greater. </li> <li data-xf-list-type="ul">Investment in OC Solutions has the potential to reduce costs, time, and resources of offering a high quality of work product to clients. This improvement in efficiency will improve the firm's bottom line, as they will be able to work on more matters and thus generate increased revenues and profits.</li> <li data-xf-list-type="ul">Moreover, improved efficiency will allow the firm to pass some savings to its clients, which can improve relationships and thus generate new business. Over time, this should lead to OC increasing its market share. </li> <li data-xf-list-type="ul">Investment in legal tech is necessary even if not guaranteed to generate the desired returns for similar reasons why the big tech companies think it is necessary to invest tens of billions into AI tech with very little returns up to this point. Simply put, the risk of missing out is too great. If you do not invest and your competitors do, considering how transformational this tech can be it can lead to a wipe out. </li> </ul>Cons:<ul> <li data-xf-list-type="ul">Generally investment in legal tech has a higher degree of risk. If it turns out to be less operationally effective than predicted, it may do very little to reduce costs or to improve revenues. </li> <li data-xf-list-type="ul">A number of competitors (with potentially higher amounts of capital available for this purpose) have already been investing into similar tech for improved client service. Thus, there may not be much scope to innovate and to distinguish OC's legal tech as a selling point to clients. </li> <li data-xf-list-type="ul">Historically, legal tech that has been found to have been very useful has been implemented in virtually all firms in a matter of a few years since it first appeared. Thus, many firms have been able to sit back and enjoy the efficiency gains resulting from other's investments. Unless the tech developed by investing in OC Solutions will be protected by IP rights or will not be easily replicable, the upside may not be as high as predicted. </li> </ul>Some advice:<ul> <li data-xf-list-type="ul">If you choose Option 2, try to (i) show off your knowledge of OC Solutions in detail; (ii) explain which specific innovations do you think would be possible via this hire; and (iii) explain how that would distinguish OC Solutions form tech rivals have been investing in. </li> </ul></blockquote>

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