"Legal Success" #1, 2012"
When Goltsblat BLP turned up on the Russian legal market, everyone was puzzled about what to expect from such a singular new player.Three years later, BLP Managing Partner Neville Eisenberg and Goltsblat BLP Managing Partner Andrey Goltsblat tell our magazine about the evolving image of the firm’s Russian office and its future development prospects.
Neville, Andrey, the partnership between an established British law firm and a Russian team of lawyers, fresh from a split from one of Russia’s top law firms, is a rather unusual alliance. Whose idea was it?
Neville: I think the background is that we were working together as independent law firms for a few years before the merger on joint clients projects. And we had discussions about how we could work more effectively together and explored various ideas. And gradually of a time after those discussions the idea developed to try to find the way to collaborate more and more closely, to explore some of the opportunities in the Moscow market. BLP as a firm was in the early stage of the internationalizing business. Our strategy was to expand mainly in the emerging markets. Russia is an important emerging market. From that perspective we were very interested in trying to find the ways of developing our presence in the Russian market.
Andrey: It was a joint decision. Within the old Russian law firm we believed that in order to move forward and to get new challenges we need to add some international elements to our law firm. It was just pure Russian staff. We have just realized that the transactional world is governed by UK law. To get into that niche it was either to employ UK qualified lawyers or to merge with some UK firm. To employ UK lawyers did not seem like a solution because even if you employ a dozen of UK lawyers it is very hard to convert into the new image. You still be a Russian firm. So we believe the only way was to join the British law firm.
Neville, two years into the partnership – what have been the biggest challenges so far? Andrey, have you ever thought, “I could have done this myself”?
Neville: A big challenge was the timing – because the merger took place in the beginning of 2009, at the time when the world was going through the worst recession for many years. The economic background for the merger was tough. From BLP’s perspective that was a big challenge: first of all, in taking the decision to go ahead and, secondly, in making a success of the merger. We had to work hard to get the success. Another challenge is that in doing this merger we had a vision to create a firm in Russia that was different here in the market. And it is an interesting and exciting challenge to develop a new market position.
Andrey: Setting up another Russian new law firm it was just demolishing all the values we built with Pepeliaev. It would mean that we had to go back to a Russian firm of smaller size. It didn’t sound attractive to me. We didn’t want to go back to the same situation but with a smaller office. It didn’t make any sense to me. I believe that the legal market requires a different proposition than just anew Russian law firm.
You position your firm as the “First Russian International Law Firm”. Is this a marketing stunt or do you see it as a genuine third development path on the Russian market beside the ILF and RuLF? Is it a model others should follow?
Andrey: It is always difficult to copy anything, particularly in the world of business. There are many businesses, which everyone tries to copy but never succeed in it. I think there won’t be anything similar to our alliance. But the same time I believe there would be some development of the Russian law firms. The founders will ask themselves “What is next?” We can look for example at Magisters and EPAP. The firms need either to merge or join someone else or they will disappear from the market. I like to be in BLP. There are people and culture that allow the Russian team to be creative and innovative. In many other firms the identity of Russian firm will be demolished.
Is it the only kind of cooperation for BLP globally? There is no Goltsblat BLP in other offices.
Neville: We have different models in different countries. We have not the same model as in Russia in other countries. But it doesn’t mean that we wouldn’t. Here in Moscow this model works very well. We might do it in an other country. It will depend on opportunities that arise in different countries.
Andrey: This situation is unique for Russia, but it is not unique for the rest of the world. There are number of cases when firms (for example Linklaters) were picking up the local firms and branded them with their names.
What, apart from providing access to each other’s markets, the two partners in this venture do for each other? How do you share knowledge, technology, optimize processes across borders?
Neville: The first thing important to understand that we are highly integrated. Everything is integrated: systems, backoffice, telecommunications, IT systems, accounting systems. Having similar operating platform drives integration. We need that as a basis. Then we do things to generate benefits both ways. We have secondments of people from London to Moscow and from Moscow to London. We make sure that people rending business services in the backoffice regularly visit from London. The senior business services staff from Moscow will go to London for a week or two to understand how the rest of the firm operates, to learn best practice and training of the systems. We also have training programmes, which are common to the firm as a whole around the world. As far as clients are concerned we have a programme of introducing the rest of the firm’s clients here in Moscow and Moscow clients to the rest of the firm.
Neville, BLP has an interesting “Delivering Further Value” program. Can you tell our readers about it, particularly about “Busy Lawyer Programme”?
Neville: “Busy Lawyer Programme” is a training programme for in-house lawyers which we’ve started a few years ago. We build a training programme around the case study. It is a technical legal training but we develop a unique case study which would be a set of the commercial facts for an imaginary company or a bank. Then we would look at 4-5 questions coming out of a set of facts and build a training programme around that for a day. We typically get close to a hundred general counsels and other in-house lawyers from clients coming along for that training programme. The delivering value concept is very important for us as a firm. If you look at the firm’s history – we had the merger between Berwin Leighton and Paisner& Co 10 years ago in 2001 – the idea behind that merger was to create a new platform for the new firm that had greater size and trying to drive the firm up the league tables. It was really important that we developed creative ways of differentiating ourselves from the rest of the law firms in the market. We really have been trying to invest in quality people, quality clients, quality work and infrastructure of the firm. The “Busy Lawyer Programme” is one of the examples. But there are a lot of other examples. “Lawyers on demand” is another business which we began in the early stages of the downturn when our clients were asking us for more lawyers on secondments. So we developed this new concept – the pool of lawyers who are not employees of the firm and want to work in a more flexible way. We interview them and give some training. And we make them available for clients in return for payment. It is a service that nobody else offers. As a result the programme was incredibly successive and helped to position us in a different way from other law firms.
These lawyers are not your employees but they use your name. How do you keep the level of quality?
Neville: First of all, we are very selective. We end up interviewing around 10% of the people applied for that position. And out of the ones we interviewed we end up selecting quite a small proportion. Now we‘ve got around 80 people in this pool. Second way, is making sure that those lawyers coming for work to the firm for at least a month or 6 weeks that we can test them and be sure the quality is right. So we had no problems with them so far. And of course we keep an eye on them when they are on assignment with the client. These lawyers have access to the firm whole support – to the legal precedent, library services; they can ask senior partners for advice.
Neville, whereas Andrey Goltsblat and his team are an institution on the local market, few people know BLP. What is Berwin Leighton Paisner in facts and figures?
Neville: We are a UK law firm and we have offices in Brussels, Paris, Singapore, Abu Dhabi, Hong Kong and Moscow. Moscow office is the second biggest office after office in London. And it is a very significant part of the firm and especially significant in terms of our international development. We are a full service law firm. We cover all the main areas: corporate, finance, litigation, tax and real estate and a lot of specialized areas like IPO, competition and antitrust. That is another reason why we are a very good match with Andrey’s team here in Moscow. His team is also a full service team. They had a very similar set of practices like our firm in London.
Today we have about 800 lawyers around the world. The proportion of the international work that we are doing has grown to around 35%. It is growing every year more rapidly. The firm has transformed very significantly over the last 7-8 years. It has a completely different profile in the UK market. It is not only the question of size and revenues and moving up the league tables. The firm is also different in terms of quality and clients’ perception of the firm – it changed dramatically. I think the awards from the Lawyer and Legal Week are the recognition of these changes.
This year was very successful for you. You have quite an impressive increase in revenue. What is the secret of your firm?
Neville: In terms of performance in the last financial year I think that was the combination of the two main things – the first is the internalization of the firm. As I‘ve already mentioned Moscow is the most important aspect of that. That changing perception of the firm from being mainly UK to being an international firm has given us a lot of opportunities during the downturn. The second factor is that we decided in the beginning of the recession to continue investing into the firm. Whereas I think many other firms decided to pause the investment programme for a period of time. By investment I mean the continuing the international expansion and the lateral hiring programme which for us is the strategically important programme. The quality of the people we were able to attract during the recession went up dramatically. There was a lot more mobility in the market particularly from the high quality firms. That gave us the impetus to come from the recession earlier and stronger than many other firms.
Goltsblat BLP started in 2009, with the world financial markets in shambles. After two years, you look surprisingly robust and growing rapidly. Are you both satisfied with was has been achieved so far in the Moscow office?
Andrey: We are pleasant to have such results but we’ve got great challenges to go on and to develop further.
Neville: We have been surprised how quickly the office has become successful and established itself. The loyalty of the clients here in Moscow to Goltsblat BLP was extraordinary. Most of the clients moved at the time of the merger. When the merger was announced lots of other managing partners in London were saying to me it would take 4-5 years before you could see the results. But in fact the new office has become successful very quickly. So we exceeded our original expectations.
We have noticed that BLP/GBLP had many lateral hires over the previous months. Is it a strategy or just opportunity knocking?
Neville: The lateral hires is the strategic programme of our firm. We’ve been doing it for years now. In the last financial year which ends in April we had around 16 partners joined us which is the highest ever. We used that to bring in new capability and to develop the firm. It is very strategic.
Andrey: It is the same strategy here in Moscow. We a have a partner in our finance practice from Linklaters. Finance services are not the part of what Russian law firms do, particularly in the international level. We also hired some corporate lawyers from ILF’s to meet this strategy.
The last decade saw a couple of clashes between foreign and Russian partners – Telenor and Altimo over Vympelcom’s expansion to the Ukrainian market, BP and AAR over control at TNK-BP. What if Goltsblat BLP wants to open an office in, say, Beijing?
Andrey: The basic difference is that they are shareholders with different stakes and we are one firm. So I can’t go and open my own office.
Neville: It is a cultural question and a question of how we govern ourselves as a firm. We‘ve got a decision making process embedded in the firm which make the whole process very easy which promote rather agreement than disagreement.
The Russian market just had its first mega merger – EPAP and Magisters – of local law firms. Do you see this as a way to develop your presence on the Russian/CIS markets or do you prefer to grow organically?
Andrey: We do not exclude the way of further expansion by merging with some other Russian firms. We are looking in the market if there are any specific expertise within any small or midsize law firms we would try to negotiate with them. This is one of the ways to develop our firm.
Neville, Andrey, coming from both the mature British and the rather young Russian markets – is the legal consulting market ripe for a major disruption? Is Richard Susskind right with his threat of an “End of Lawyers”?
Neville: I make two points. Firstly, national markets can change quite quickly. For example, Australian market is changing rapidly now. And it is hard to generalize what is going to happen. The second point is the global trends what I think Susskind wrote about. There are some global trends: technology is becoming more and more important, there is a trend to consolidation in the legal market, there is a pressure from clients for law firms to become more efficient. These changes will produce winners and losers in the legal market. Some firms will be successful at addressing the challenges and will grow stronger and other firms will struggle to meet the challenges and will get weaker and weaker. In the past it was easier for firms just to keep going on and in the future firms have to be more creative and energetic.
The leading law firms decided to open their offices in Africa this year. Allen& Overy will open its office in September 2011 and Clifford Chance announced that it will open its office in late 2011. Neville, what do you think about this strategy? Would you consider this way of business for BLP?
Neville: As far as North Africa is concerned, we have the office in Abu Dhabi. As far as the rest of Africa is concerned we have partners in the firm who specialize in certain regions: West Africa, East Africa, South Africa. But we don’t have plans to open the new office there. The strategy of expanding in emerging will be continued. But we’ll do it at a responsible speed. We will focus on major centers rather than having BLP flags in every country in the world.