Technology law firm Bird & Bird is continuing its Hong Kong expansion in anticipation of a pick-up in IT spending. Marcus Vass, a telecoms specialist, is moving to the firm from Norton Rose to add to its core practice areas of telecoms, media and technology (TMT) and intellectual property.
Vass follows close on the heels of two other recent hires. Nigel Stamp joined from Clifford Chance in October. He specializes in information technology and e-commerce, and established CC's TMT practice in 2000.
Gordon Milner, who focuses on technology clients, joined Stamp at CC from Slaughter and May and followed him to Bird & Bird late last year. Vass previously worked with Stamp while both were at Baker & McKenzie.
This shift of legal expertise from prestige London law firms to a much smaller sector-focused boutique is fairly unusual and highlights the strategic weakness of big international firms offering services in an industry where fewer established client relationships exist, price sensitivity is high and the business cycle can be volatile.
"At the large firms, headline rates became increasingly difficult to justify for legal work on operational technology projects as the recession took hold and companies looked ever more closely at their legal spend," says Stamp. "At the height of the boom, those firms were happy to invest in technology practices, but as soon as there was pressure on fees and profitability they were less enthusiastic."
During the squeeze TMT lawyers at big firms had to adjust to their practice's non-core status within a hierarchy dominated by corporate, capital markets and banking partners. For lawyers such as Stamp the attraction of a dedicated practice was hard to ignore. "In moving to Bird & Bird, whose core practice is TMT and IP work, Gordon, Marcus and I can now offer the same level of expertise to our clients at considerably lower rates."
It has often proved tempting to think that the future of legal services will follow the model of the accountancy firms, with boutiques being swallowed up by a handful of global players that dominate the market worldwide. But law firms have so far struggled to fulfill this vision and firms such as Bird & Bird have remained profitable.
In Europe the firm has been on an expansion drive for three years now, with a second office opened in Germany last year and a European network that now includes offices in Belgium, Italy, France, Sweden and the Netherlands. After turning its back on a US merger - Californian firms Cooley Godward and Orrick, Herrington & Sutcliffe were talked about as potential partners - the firm is now looking to grow in Asia.
Globalizing law firms have struggled to graft modern business leadership on to the partnership structure. They might be global, multi-million dollar businesses but managing them is still the exclusive domain of lawyers who have risen through the partnership ranks. And the partnership itself still retains a key decision-making function, making law firm managers more like cat-herders than CEOs.
"With law firms there's always a lag; they take decisions like super-tankers," says Vass. "Arguably, the time for consolidation was two years ago, but instead what we've seen is consolidation of the big firms into their core practice areas in the last 12 months."
Smaller, sector-focused firms are more nimble, say the lawyers at Bird & Bird. They understand their industry - Stamp, for instance, worked in software development for 10 years, at NEC and Nomura, before qualifying - and are able to quickly translate that understanding into action. Indeed, Bird & Bird's Asian expansion anticipates a pick-up in the industry. "Businesses have been avoiding refreshing their technology during the recent economic downturn," says Milner. "Instead, for the past few years they've been nursing their older systems along. So as soon as they see a crack of daylight the requisition orders start flying out."
By staying close to clients throughout the cycle niche firms can spot that crack of daylight sooner. As Milner's former colleagues at Slaughter and May would say, there are many different ways to run a successful law firm.