GMT: The Podcast For Globally Minded Law Firm Leaders
GMT: The Podcast For Globally Minded Law Firm Leaders
2023 GMT Season Finale with Special Guest Gerard Tanja
Rob and Murray are joined by Gerard Tanja, founder of Venturis Consulting Group. Gerard is the EU's leading expert in global law firm mergers. Join us for a brisk and content rich discussion covering Gerard's unique approach to consulting with clients seeking cross border mergers. Hear about Gerard's thoughts on the next hot spots in Europe for global expansion and Rob shares his insights on why Hong Kong continues to be a location of choice for the largest firms in the world. We also discuss the impact of the A&O Sherman merger and its implications for competition across Europe's legal sector. (Hint: Buckle up.) And of course you do not want to miss the last chapter in "Bata's Best Bets" for 2024. Please contact Murray (murray@mcoffey.net) or Rob (rbata@warwickplace.com) with any thoughts, questions or ideas on who we can improve GMT.
Contact Rob and Murray:
Robert C. Bata, Founder and Principal, WarwickPlace Legal
Email: rbata@warwickplace.com
Murray M. Coffey, Founder and Principal, M Coffey
Email: murray@mcoffey.net
Rob, welcome to GMT, the podcast for globally minded law firm leaders with your host, Robert Bata, principal of Warwick place legal and Murray Coffey, principal of M Coffey, between them, Rob and Murray have about three quarters of a century's experience working with some of the most notable law firms on the planet. This podcast is designed to help those law firm leaders tasked with growth make great decisions about whether and how to implement cross border expansion for their firms and what it takes to succeed. And now. Rob Bata,
Rob Bata:hello, everyone. Welcome back to our latest edition of GMT, which I'm proud to say with Murray that we've now completed the whole year we've had a number of what we think were very interesting podcasts, and so we consider ourselves a minor success, and we're looking forward to many more interesting podcasts in 2024 today, we're very, very happy and pleased to have Gerard Tania with us. Gerard, who's in addition to being my good friend, is the founder of venturis Consulting Group. He has been for the past 30 years or so advising international legal organizations, multinationals, alternative legal service providers and even governments on strategy and market positioning. He's executed very large number of law firm and law firm mergers, strategic reviews, market entries, complex change process, reviews and implementations. Before founding, venturis Gerard was also in charge of he had global responsibility for post merger integration at Clifford chance and as well as partner development and a number of other significant responsibilities. Earlier in his career, he was legal advisor to the Dutch Ministry of Foreign Affairs. So he was a diplomat as well as as well as a lawyer, and we're just delighted to welcome him. I should also say that my consulting firm, workplace legal, is in a an alliance with Ventura, strategic alliance with venturis, and we are able, together with our with our other alliance partner, Kerma partners, to essentially cover the entire globe with our consulting expertise, if I may, give us a little bit of plug. Gerard, welcome. We're really, really delighted to have you here. I see it so it's evening time in Amsterdam, where you are based. I should mention that venturis, although based in Amsterdam, is also throughout Western Europe. You have, you have a presence in Sweden, Germany and France. I may be leaving out something you you do cover the entire continent of Europe with your consulting work, and we're going to be very interested in your insights. And I think just just to kick things off, I'd like to understand, and I think our viewers would really like to our listeners, would like to understand a little bit of how you approach market entry for law firms. What? What sort of activity do you? Do you envision? How does market entry work when you're thinking about a law firm merger or a cross border entry into a new legal market.
Gerard Tanja:Yeah, thanks Robert for having having me in your in your podcast. Yeah, when we work on market entries or merges, which are basically similar type of processes, we we basically look at what I would call the five fits in our in our work, when we start the process, the first one is always the what I would say, the culture and ambition fit. You have to ensure that the partnership, the two firms that want to merge, or, you know, when one firms want to one firm wants to enter the market, you know wants to achieve you have to to ensure that your ways of working, your few on how the market will develop, and you do need an aligned understanding of the, let's say the respective drivers, drivers of the. Merger or market entry, that's always, always the first step, I would say the first fit. And once you know after such a discussion, you're still friends and you like and love each other, you focus more on the client. Fit the practice, fit the performance. Fit performance in the sense of the financial, economic KPIs of the respective firms on the basis of what I call the Rules Model, the realization, the utilization, the leverage, the expenses, the sort of costing and the speed of getting the money in, the profit sharing systems, costing structures, etc. And last, but definitely not least important, as you look at at at the people fit, how will the staffing, the resourcing of new co how will that, that look like? And are the issues in the people arena? Are they being addressed like succession planning? How does the leverage models compare? Do we achieve the breadth and the depth in the respective practices that we feel are really important? And I think that, you know, those five fits basically determine the potential success of a market entry and and and and or merger. And I think what I see in my practice in continental Europe depending a little bit on the maturity of the respective markets, and there are differences in continental Europe between the respective markets. I think this, this is a reflection of the growing maturity of, let's say, the more advanced continental European markets, because you know the where to play, the how to play, and can we win? Question is getting increasingly important to determine your competitive edge as market segmentation become more and more clear in continental Europe, especially in the more advanced markets. So I think this process or approach methodology, whatever you want to call it, is something that we really focus, focus on during our work with, with with national, international clients.
Rob Bata:You know, here are one of, one of the things that we address in this podcast is also the interplay between the law firm executive, the non lawyer professional, if you will, and and the the actual the lawyer management. And I wonder if, if you could talk a little bit, and I think, I think very well, have more questions on this. Yeah, if you could talk a little bit about when, when you look at these five fits and and you start the process, who are the people you're talking to?
Gerard Tanja:That's, that's an interesting question, because, again, it, I think it depends very much on the maturity of the respective markets, and thereby the maturity of the respective firms in the more mature firms. I would think that, you know, we speak in first instance, is always with leadership and management. Always, however, as soon as the initial due diligence starts, what we see, and we are currently engaged in such a process, we see that non lawyers are increasingly involved in in in the due diligence, and also in already shaping the strategy and the positioning of of new CO of the new firm. And I think it is not just the international firms active on the continent who are, who are doing this, I also see that the top tier, the leading national independence in involved in such processes that follow, increasingly, those those steps. So what we do see, especially in HR, IT BDM, so business development, marketing, top notch non lawyers are involved from the beginning of the process
Unknown:and get hurt. You know, sorry,
Gerard Tanja:sorry. Murray, one more. Please, please, if I compare that to, let's say, 10 years ago, Robert, that would not have happened. And. Now is happening, and I think it has to do with the quality of the non lawyers involved in in law firm strategy discussions.
Unknown:I agree with you. I'm a completely I too, have have seen, you know, an increase in the activity of people who come from my side of the of the equation, getting involved earlier and earlier Rob, Rob and I, that's how we got to know each other, because I was brought in very early on a on a on a possible merger. And it, it was very helpful, I think, in in in the immediate term and in the long term, and figuring out how to position question for you, and I want to go back. I love this. The concept of the five fits. It's great. It's just a wonderful way, sort of contextualizing how an entity can look at whether it's the right thing to do, whether that whether the merger is the right thing to do. And I was especially impressed with your focus on culture as as being one of the one of the very first initial considerations. I don't think that's always that's always the case with many mergers. I think Rob and I have seen mergers where culture was ignored, and much to the peril of the of the of the merged, emerged entities. And so when you're inquiring about culture, what do you hear? What are the, what are the triggers that you hear that say, okay, these are, this is a these are two entities where we can figure out a way to mesh the cultures. I'm not gonna say match or merge, say mesh, because it's not always a perfect fit. We've talked about this, you know, in the past, with with some branding folks that I know. But how do you know? What do you hear? What's the what are your, you know, indicia, if you will, of of a of a of complimentary cultures.
Gerard Tanja:Yeah, I think the first thing we usually do because it, it, it's, it's very important. I think because you have to work, it's not a corporate you're dealing with. It's, it's, it's, it's a partnership which is quite often quite different. The first thing we always try to establish is to well, to figure out whether the ambition and aspiration level of the core partners in the core practices of new CO are aligned. And when I say ambitions, that can be professional ambitions, it can be the type of work. It can be ambitions with respect to clients, to financial, economic factors, to the organizational aspects of a potential merger, it can be everything. But that is, I think, the first thing we try to establish. So it's a very methodology, maybe approach. That's one thing. The other thing, I think, we're focusing on, and we use some some instruments for that, and some validated tools. The other thing is the way of working, and the value orientation of partners, and that relates to the type of work, the type of engagement, the type of clients, etc. But the ways of working, is it team oriented, collaborative oriented, or is it more eat which you can kill a type of culture, etc? So usually in a very early stage, we are also focusing on the profit sharing, profit distribution type of system, because that's quite often also an indication of, you know, the collaborative nature of a firm or the group of parties. So these are, I think, the two most important things we're focusing on.
Rob Bata:You're very interesting, and it's certainly my experience. You know, there are different ways that law firms approach each other when, when they're thinking about a potential combination and and, you know, people talk about culture a lot, and it's very difficult to define, but I find that when there's that initial contact, when people come away saying, gee, I really like that person, that already is a sense of how the culture may align. Because what did they like about that person. Maybe the chemistry was good, but maybe what the person said aligned with the way this other person not only saw his or her own firm, but how the whole thing together might look. So it's, it's absolutely crucial, um, let me ask you, since we're at the at the end of the year here, um. We're going to look back a little bit and maybe look forward to, you know, the discussion in the legal world, and occasionally in in the in the financial world, but more in the legal world, for the past seven months, has been completely hijacked by the by the Albury Sherman Sterling merger, a merger that is really the first, I think, truly significant, and potentially, I think, very successful transatlantic, so called Magic Circle merger with a US firm. I think it's quite significant in a lot of ways. And I'm just wondering, what are your thoughts about what this means for the large independent firms in Europe, and also for law firm alliances, and maybe not even when I say independence, I mean kind of the national champions, as opposed to ones that have lots of offices in different parts of Europe. How do you see that affecting the continent?
Gerard Tanja:For the national leading top notch independence? I think it depends on the jurisdiction. I think in those jurisdictions where both ano and Sherman have offices. I think the national independence will be confronted with, with with with heavy competition. So competition will grow, and they have to formulate an answer in other jurisdictions. And that's actually, that's, I think, out of my head. I think it's, it's probably Italy, Germany and France. I think that's where, you know, you have, you have German and a, you know, offices. So I think in those jurisdictions, I'm pretty sure that the Italian top three, in Germany, the top three independent and in France, they will definitely look at this merger, because I do think it will affect them. I think in other countries, I think people are more relaxed about it. It for some firms, it could mean less referral work because of the consolidation. But for others, it's an opportunity, and it could mean actually more work. You know, unless you're part of the ano network, because some of the firms are part of the of the ano Best Friends network, and they will probably benefit, because they get more inbound referral work. So it very much depends. But I don't think that that national independence will get immediately very nervous about this move. I think it will change if some of the other magic circles also present in those jurisdictions will follow the example of A and O, I think that could have an impact. I would also think that there is a kind of a indirect effect, and that is that firms which are slightly below international business firms slightly below the top level. So, you know, international business law firms operating in the upper mid market, I think they will probably see that they need to to strengthen their presence in continental European jurisdictions. And I think I don't, I think it's not a surprise that that firms in that range, so whether it's CMS or Dentons or everches, those kind of firms, you know, they will really, they're all involved in in in European expansion strategies and programs, And I think we will see more of this.
Rob Bata:Yeah, I think, for example, and in addition, I think firms like adelshaw, Goddard and Fisher are are expanding fairly aggressively and, and I think that that's definitely, clearly, it's not an immediate response, because some of those expansions were planned before any of that, but, but they're definitely looking to to bump up. I think some successfully, others may be, may be overreaching a little bit, but that's happening. I have one other thought on this, which is, most European firms are not a major factor in Asia. Of course, the Germans get a lot of work from China and so forth. Obviously, the stronger the national economy, the more likely that there's going to be China trade and investment going back and forth. But it seems to me that. That another, another potential fallout from the ano Sherman merger for the Europeans is seeing this, this great, big entity, take shape in Europe, which also happens to have a very strong presence in Asia, where I suspect that more European firms will be looking to see if there's potential foothold for them in Asia in order to compete with that. I may be wrong about that, but I feel like that's an additional dimension that this merger brings to Europe, the fact that it's has such a power, such a powerful presence in Asia, and therefore the ability to bring more work into and out of Europe. It's, it's, it's a, it's something that I think is not the principal focus, but I think that people will be thinking about that, because Asia continues to be and is increasingly important in the world's economy.
Gerard Tanja:Yeah, I'm not sure whether I totally agree with you here, Robert. I think it, as you said in the beginning, it really depends, I think, on the on the foreign direct investment flows between continental European jurisdictions and China and and I think there are only very few jurisdictions Germany you mentioned, where potentially this could be a factor. On the other hand, what I have seen over the last five years that many of the independent national firms from several jurisdictions in continental Europe have actually closed their Asian offices, with a few exceptions. And you know, just to the Netherlands, you know our our annual export to one to Germany, to the federal state of Bavaria is is six times bigger than our export to China, just to put it in perspective. Yeah. So, so I think for many firms in the larger continental jurisdictions, again, perhaps with the exception of Germany, perhaps Italy. I don't think this is a major consideration. What. What could happen is that, as a consequence of this, this ano Sherman merger, European independent firms will try to strengthen their European alliances and networks, and will try to, in that, you know, indirectly, try to get a bigger share of Asian business Union, for example, or Advan, or the European Alliance of humanity, Gliese, Jeet and Catra, casas, those kind of of alliances and networks will grow, I think, their European as a first step, presence and visibility and credibility and as a second step, may then decide, you know, to together to do more in Asia. I think that is, that is a more realistic scenario. I think,
Rob Bata:yes, I'm not, I'm not suggesting that there's going to be a spate of new opening so, but two things, one, it's not just about the foreign trade. There's more. And it's certainly not just about China. China, in many ways, is little bit of a little bit of a an issue for a whole number of reasons. But you do see, for example, the Ebert Sutherland arrangement with with King andwood malicious, where they entered into this very interesting relationship of referring work to each other and kind of dividing the globe the way, the way the Pope did between the Spanish and the Portuguese few 100 years ago,
Gerard Tanja:but It was the 15th century.
Rob Bata:We're back to that, apparently, in some ways. But in any event, I think you will be seeing that and you look at, well, Paris, York, in Spain, opened in Singapore, again, there are some very interesting things to be doing in Asia that don't involve China. So that's kind of what I'm talking about. You know, there's, there's asset management work, there's, there's near shoring type of work that, you know, assembling and manufacturing and certainly litigation. So that's where I feel that the combined fire power. Of an ano Sherman, having also that great, strong presence in Asia will make some firms think about how to address Asia a little bit more, how to be more of a factor, certainly not talking about a great spade of Gardner's. But let's move on, because I do want to talk a little bit about one of your latest projects, because you talked about the different approaches in Europe and different areas, and you recently executed a merger, or rather a market entry, for CMS in the Nordics. And talk to us a little bit about what's going on in the Nordics and what went into the thinking, obviously, without disclosing any confidential matters.
Gerard Tanja:Yeah, well, I think the CMS, and not just CMS. There are a few other comparable firms, upper mid markets, Dentons, DLA, etc. They were absent from the Nordics until, I would say, five years ago. I think DLA was the first, you know, firm that really successfully entered the Nordic markets in one go, with the exception, I think of Finland, initially very successful. I mean, you have a schedule of bird and bird. You have Osborne Clark, but these are still relatively small operations. And I think CMS figured out that the Nordics were really a blind spot, whereas, again, if you look at at at you know the trade relations, the foreign direct investment flows within Europe, but also from the US UK into the Nordics. It's quite substantive. So for CMS, I think it was a very strategically, a logical action to apart from Latin America, where they've also entered several new markets over the last five years, to focus on, on the Nordics, and the first, the first project to enter the Nordics was actually 2021, when Kluger joined CMS in Norway, kluge number seven or eight at that moment in, at that time in, in Norway, then we had two years of COVID and nothing, nothing much happened, although we had already prepared to market entry into into Sweden, which was restaurant, which at that time, was the number five in terms of revenue in in Sweden. And my prediction is, my prediction is that in the next 12 to 18 months, we will see market entries in Denmark, in Finland, because then I think the potentially, potentially with a market entry in the Baltics as a, you know, an ancillary action, but I think Denmark will definitely Follow in the next 12 to 18 months. And then, and then, Finland,
Rob Bata:I'm glad you raised the Baltics, because I'm wondering about that too. The Baltics Have you know some, some excellent law firms. Is fantastic, tech practices there, labor and employment practices and so forth. The same time they're on the border of an expansionist Russia, and that's a perilous state to be in. But I also happen to think that there's going to be, there already is but, but there's going to be more interest in expansion into the Baltics, and I think that that will actually be very good for the legal for the legal market there,
Gerard Tanja:yeah. But what I think Rob is that that now that CMS is there, and, you know, there were some issues with which I think the late all process, process with the regulatory framework of the Swedish Bar Association, which is not too enthusiastic about international firms, you know, coming into Stockholm and gotobark, but you know, that has been resolved now. So what I predict actually, is that we will see firms like like Dentons and potential firms like like field Fisher, you know, wanting to expand into the Nordics as well. That seems to me inevitable. On the other hand, I think, and that is perhaps something we can discuss as well, because I, I do think that this whole market entry of CMS and also DLA and the growth of those firms in the Nordics will will have another effect. And I do think that. And as you know, should the Norwegian the leading firm in Norway, you know, open first in Sweden, then in Denmark. I think we will see, as a consequence, we will see more of those. Nordic expansionist trends. I would not be surprised if we would see another Nordic combination, you know, in 2024
Rob Bata:Yep, yeah. I think that that's right. I think that it's, it's kind of a powerhouse region. And there's, there's a number of very, very, very successful firms, and it would make a lot of sense, and I think it makes sense for those firms also, which have very close relations with the Baltics, to be to be looking at some sort of entry or Alliance, or some other arrangement with some of the leading firms there, Murray,
Unknown:go ahead. Okay, yeah, my question, Garrett, as as you know, as you were talking about the the different markets in Europe, where, where ao Sherman has, they both have had some kind of footprint, and it's going to be a larger footprint today. So Italy and France and some of the other those law firms, we'll call them legacy law firms that are that are in those jurisdictions. Are they ready for the increased competition? You know, do they have their for example, you know, I look at through the lens of communications and brand and business development, you know, are they ready for this? Do they have they? Do they have their, their their their brands honed to a point where they can actually talk about the distinctiveness of their offering versus, you know, versus the, you know, the 800 pound gorilla that they're, that they're that they're going to be managing in in all this. So I'm just curious, because it sounds to me like there may be some some needs there, but, but I'd be curious to see what your take is, because you're obviously looking at this from a with a with a fine
Gerard Tanja:my tooth. I think some are, most are not. That's a short answer, I think. And again, it depends on the maturity of the jurisdiction. I think that that, and I, I've been at Clifford chance for six years, so I can compare, I think, what it means to work in a truly international firm and and what it you know the difference with working in a national firm that does a lot of international business, right? And there is a huge difference. There is a huge difference. And I do think that in many firms, people who work in leading national firms with a lot of international business, underestimate the quality and the power and the 800 pound gorilla of truly international and global firms. So my answer would be, in certain jurisdictions, the firms are definitely ready, but in several jurisdictions, that not the case. And you know, in general, I would say that in the Benelux, the Nordics, I think the firms are more ready than in the more traditional jurisdictions where law is still more a profession than a business. Yeah, in Italy and Germany, Austria, Switzerland, Spain, Portugal, with a few exceptions, I think, you know, there is still a lot of work to do in the area of call it professionalization of now or business support infrastructure to reach the level that that international business firms and the global elite have reached in every area it HR in particular, I would say, business development, marketing communications.
Unknown:Well, then my brother and out there who are listening to this, and I've got many who are on the on the BD and communication side, make sure your passports are up to date. Folks, Let's rob. I don't know if you had a follow up question there, but I we're, you know what time is starting to, starting to become an issue here, and I just want to make sure that we get to, you know, can't, we can't end our our first season without Bata best bet, and especially when we have Gerhard here, who has, who has put many Best Bets. It sounds from this conversation, but, but as we were discussing before the call, before the podcast, this is the opportunity for that hot take on to what we're looking at in 2024 what's going to be unusual we're coming from this, as Rob You were saying earlier, an incredibly surprising 2023 Yeah. So what do you think we'll go to you, first Rob and then, and then Gerhard. We'll, we'll go to you. Yeah,
Rob Bata:well, well, just, just to go back to that comment about 2023 we had a lot of surprises. I think two things happened that were kind of earth shaking. One of them more involved in the US. One, of course, is ano Sherman, and the other was the stroke and stroke dissolution, going out of business. This is something that I think US firms are, or listeners in the US may be a little bit more involved in or more and more interested in, but I think it has tremendous significance for a number of reasons, including the fact that stroke had an opportunity to to survive and to thrive And and enter potentially very useful mergers, which they either couldn't do or wouldn't do, and their lessons from that. But part of my hot take, if you will, and when I was thinking about it, was there were so many surprises last year that maybe my my hot take is that there'll be even more next year, but, but I will say that there are more strokes in the US, and we're going to see more and for a number of reasons, part of which is that the legal industry has done so well that there's a great deal of complacency out there among firms that should be looking at growth strategies instead. So that's one the other two other things, I think, after an O Sherman, we know that the so called Magic Circle firms in the US have kind of touted their strategy of growing by picking up a few people here, a few people there, sort of lateral acquisitions and so forth that has not resulted in their acquiring either the kind of market presence or position or footprint that they enjoy pretty much anywhere else around the world. And I think that there's going to be pressure from the internal from from the partnerships of those firms for them to do something similar to ano Sherman assuming such a thing is available and it can be so, I think that's one. And finally, I would say, contrary to what people are seeing now in Hong Kong, I think there will be some law firms reevaluating whether they shouldn't enter or stay in or return to Hong Kong, partially because of a very vibrant crypto and fintech scene, as well as still a great deal of Chinese money in there, and as long as their MMB is not convertible Hong Kong, despite the various political issues, the the data protection issues, the security issues and so forth, I think will be on on the to do list of some firms, at least, to take another serious look at that's it for me, Gerhard, what do you think?
Gerard Tanja:Well, I would like to follow up on your second bet, to which I agree. I think that what we see in continental Europe, what we have seen in continental Europe, is that various firms have really underestimated and then I focus particularly on the national independence, not only the leading but also the tier two firms operating in the upper mid market. I think we have, they have really underestimated the importance of scale, scale in terms of depth and breadth in practices, in terms of being able to offer specialized expertise, but also have the generalist overview, so to the strategic overview, and thereby also, I think, disregarding a little bit the required investment power. So to say, you know, to be able to compete, to keep, to maintain the competition, and be able to defend their market share. So to say, because, I think, and that's inevitably, also because of the war for talent that's going on in a large in many jurisdictions in continental Europe, I think we will see more consolidation. We will see consolidation by means of market entry of international firms in several jurisdictions and. Reaching their market share. But we will also see, I think, consolidation in the upper mid market in several jurisdictions, the Nordics, the Benelux, Italy, Spain, etc. And I think to a certain extent, that is the indirect effect of what's happening at the international level, at the Sherman and ano level, because we will see increased market entries. We will see several international firms expanding in in in Europe, Central and Eastern Europe as well. And that will have an effect, I think, on on, on on the upper mid market firms you know, who have to make a decision, do we join an international platform, or do we increase at a national level scale in order to continue to be able to continue to compete? I think that that's what we will see in continental Europe.
Rob Bata:Very insightful.
Unknown:Yeah, yeah. So I hope everybody's listening closely, taking notes.
Rob Bata:Well, thank you again. Gerard, this was absolute pleasure to have you on and to get your insights. And this is a good time, even though I think this podcast will probably air in 2024 let's keep in mind that this is still last few days of 2023 so I'm going to wish you and Murray you too, very happy and healthy and successful and prosperous new year. And I wish that for our entire audience as well, and and, and hopefully also a little bit more peace,
Unknown:yes, yes, and a point of privilege, Rob, I want to just let you know, yes. Happy New Year. We're looking forward to 2024 and for me, this podcast and working with you has been one of the true bright spots of of the of the past year and the development of the relationship. So thank you. And I really can't tell you how how much this has meant to me, and really do appreciate you and everything that that you're doing. Gerhard, Wow, great to great to spend some time with you as well. And we'll, we'll see you all in a probably just a few weeks, we'll come up with another podcast. And as always, if you have any questions or ideas, please let Rob and I know,
Rob Bata:yeah, and likewise, same feeling, and it's a pleasure to work with you. Murray, thanks again. All the best.
Gerard Tanja:Thank you for having me. Bye. Bye. Pleasure. You.