Adapt or die

In a constantly shifting legal landscape, it is increasingly clear that in order to survive, firms must recognise what clients need and deliver it. This interview with SJ Berwin's senior partner, Stephen Kon, explores the issues surrounding the need for adaptability.

One of the themes discussed by the 'Law Firm as a Business' panel at CityLawLIVE in December 2012 was the importance of adaptability for both lawyers and law firms. The years since the financial crash have seen a paradigm shift in the business world, and the legal sector has altered no less than any other. No lawyer or firm can survive, let alone prosper, unless they offer what clients need. Success, therefore, involves recognising client demand, both in terms of type and style of service. In a globalised economy, it also involves tailoring service provision to reflect the geography of business needs. LawCareers.Net asked SJ Berwin's senior partner, Stephen Kon, about just these issues.

Is SJ Berwin an adaptable law firm?

"SJ Berwin as a firm understands the need to adapt to the business environment, and indeed the market for legal services more generally. We started in 1982, just over 30 years ago, and at that time we were tiny - with just a dozen lawyers. We saw a particular opportunity in the market: we were a City law firm and our then senior partner, Stanley Berwin, was a City man as he had been a director of the merchant bank, N M Rothschild. There was a sense that law firms were not actually providing the sort of service that clients were entitled to receive - 'law at the speed of business', as we later termed it.

Law in the 1980s was really operating on a different timescale and to different standards in terms of service provision. Lawyers were mostly concerned about the legal advice that they gave - which they have to be - but it was often a little divorced from the commercial reality of what clients were trying to achieve. We were often styled as the first American US law firm in London, even though we weren't American. We were viewed as very responsive, very service driven, very client driven, and with partners who provided creative, commercial advice rather than long, detailed, rather turgid legal advice without commercial perspective. That's how we began to gain traction and build our business."

Around that time, the Big Bang happened. Presumably the City was changing…

"A lot of City institutions had very lengthy relationships with established law firms - stretching back hundreds of years in some cases - but the market was changing quite substantially. A lot of the famous names were consolidating, sometimes losing their identity completely. Many of the investment banks at that time - the Morgan Grenfells and the Warburgs - morphed into something completely different, normally with quite a strong American connection. The City was changing and we were slightly ahead of the legal market in recognising that and addressing it in a client-friendly way.

We also saw the need for the firm to Europeanise. My area is EU competition law. I have a fairly international background: I studied in Europe, worked at the Commission for a short time and I've taught European Community law at English universities. We saw very strongly that we needed to adapt our business to our clients' increasing internationalisation, or Europeanisation. We didn't merge with any law firms in Europe, but we were obviously working more with talented lawyers in many of these jurisdictions. We decided to set up our own business, growing organically through recruitment rather than merger.

This all started around 1998, and slowly but surely our business developed on a European level, adapting to the internal market and the fact that our clients saw Europe as a domestic market rather than a foreign one. In all the areas in which we practised, clients were looking to Europe and building their own businesses. They, too, had clients in Europe and the single market became a reality following the Single Market Programme in 1992. The financial services sector was at the forefront of that. Our idea was to provide a one-stop shop for clients and to build local practices to grow our client base from Europe, which it was then right to regard as a domestic market."

When a law firm opens a new office, how does the decision-making process work?

"It's something that you are constantly thinking about. We now have small offices in Hong Kong and Shanghai, and a very successful office in Dubai: all of that has happened in the last three or four years. In each case, you'll have a combination of the management and particular partners who sponsor the idea. Normally you wouldn't decide to go to somewhere on a wing and a prayer. We've never opened offices on the back of the idea that we'll send a particular number of partners; we've always tried to open with local people. Dubai - and to some extent Hong Kong - are exceptions. We opened Dubai with two key partners, one from Paris and one from London, because we identified two particular people with the knowledge, skills and enthusiasm to develop the office. These days, you wouldn't open an office simply on the back on an instinctive belief that a jurisdiction or city will be profitable in the medium term. You have all the expenditure of opening and you're unlikely to make money in the first year. Now, given the current economic climate, it is looked at and pondered upon in so much detail. We have an opportunity that may come through early in 2013, and we've looked at it in enormous detail. You go into things on the back of business plans and projections that assess the likely upsides and potential downsides."

What is the vision for the future?

"Standing still is not an option for us, any more than it is for any ambitious law firm. We are playing in a global market and we have to respond to that. We continue to want to see our market grow internationally, both geographically and in terms of practice areas.

Take, for example, our disputes practice. Litigation is currently 15-16% of our firm and we have an ambition to increase that to more like 25%. We're not alone in this ambition in this competitive market, but we are building and recruiting, and we have just opened a litigation practice in Germany. I can see us continuing to develop the contentious practice in our various offices, but also here in London, where arbitration is a major area. I would be disappointed if we don't see our international arbitration practice grow somewhat. We have some wonderful senior associates that I hope will come through to partnership.

We had already established sectoral interests in the firm, but we have recently strengthened and built significantly our sector group initiative. We have seven sectors and believe it's important that, at all levels of the firm, our people are able to talk to clients on their sector issues - get under the skin of the client's business and understand every aspect of it. The client is looking for a multidisciplinary team that actually understands what is happening to them and in their market generally. This is the way investment banks tend to organise themselves as well.

All of our associates have been asked to join a sector group in addition to being members of a department.  They are choosing their sector groups now and we think that this is a good way of getting real momentum into this initiative."

Will future SJ Berwin lawyers need different skills to their predecessors?

"There has been a paradigm shift over the last four years, and it's a market phenomenon. It's operating on a number of levels. Firstly, the economic downturn means that firms can't offer as many jobs as four or five years ago. Secondly, clients' attitudes towards how you staff a particular matter and how you service their needs have changed. They are less willing to pay for junior-ranking solicitors as they have a sense that they are paying for their training. That view is sometimes justified, but not always. There has also been a shift towards more in-house roles and fewer external roles. The net result is that it is even more competitive and challenging for young lawyers to get positions in City law firms, and it is an inherently less secure environment. On the other hand, you can't ignore the fact that young lawyers get paid extremely well and there may be some form of recalibration of the whole economic base of law firms.

They will need more commercial skills. Lawyers have to be trained as to how to behave in the client-facing role and they need to be commercially sensitive and personally accessible. All law firms would encourage this through learning and development programmes. We're looking at ours constantly and listening hard to what our people are saying to us. There is a massive change taking place at the moment, and I don't think that we'll ever go back to how it was in the pre-2008 period .

If you are working for a law firm such as SJ Berwin, there is a good prospect of you spending part of your career overseas. Some lawyers are very keen to do this, but some aren't. There is also the whole question of the fungibility of lawyers as well. Someone working in one department may need to be available to support another department, so they will need to be more versatile.  I don't think that's a bad thing at all."

What is in the DNA of an SJ Berwin lawyer?

"They are creative; extremely hard working; entrepreneurial and they like working in a relatively informal environment, but one that is quite demanding. They are also people who like to have fun. Overall, we want our people at all levels to enjoy themselves and to be committed. The hard work shouldn't be a trial: it should be something that you feel committed to, challenged by and enjoy, because it's part of being a collegiate and integrated firm. Have we failed sometimes in achieving that? Absolutely. Are we fairly determined to get it right going forward? Absolutely."