Editor’s Note: This story is adapted from ALM’s Mid-Market Report. For more business of law coverage exclusively geared toward midsize firms, sign up for a free trial subscription to ALM’s new weekly newsletter, The Mid-Market Report.
International growth is all the rage these days, with the number of transatlantic and other global mergers swelling. But for midsize firms, the path to a global client base can take shape in many forms.
The overhead and management challenges of opening a foreign outpost are often unappealing for midsize firms, which have chosen instead to service an international client base in different ways. But some have made the leap and hung a shingle in locales thousands of miles from their U.S. headquarters. Regardless of the path to get there, they all cite the ability to offer more flexible rates and services to international clients who often don’t want or need to use large firms. And some midsize firms have focused on representing foreign clients in practice areas abandoned by larger firms.
International strategy for midsize firms typically falls into three buckets: joining a formal law firm network that gives the firm access to local counsel in foreign jurisdictions; servicing foreign clients from the U.S. and building those contacts through personal ties to the foreign jurisdiction; or actually opening an office in the jurisdiction.
Below are examples of each.
The ‘Best Friends’ Approach
Pryor Cashman has taken the approach many midsize firms have implemented, focusing on a few international markets where the firm has strong contacts. But Pryor Cashman has built that capability out through its participation in a law firm network: Interlaw, a network specifically of midsize law firms.
“We have a network of 80 firms with whom we confer on a regular basis—firms we know have substance and depth—so that we have this capacity, if you will, to make sure our clients’ work can be handled this way, but it doesn’t change the component of our largely regional market,” said Pryor Cashman managing partner Ronald Shechtman.
The firm has partners with deep ties in Germany and China, and helps clients from those jurisdictions who are interested in leveraging U.S. capital markets. The lawyers will assist in getting the foreign companies set up in the United States, open office space and deal with immigration issues.
The immigration component of the network is an important one for Pryor Cashman, and the area most often in play when the firm taps its law firm network contacts. It helps with Pryor Cashman’s U.S. clients as well. A client may need to send someone to a plant in Hong Kong, for example, and the firm will call its go-to local counsel in that region.
“A good deal of our work is dealing with U.S. companies seeking to bring in people from around the world,” Shechtman said.
Pryor Cashman clients include sports leagues, hospitals, pharmaceutical companies, fashion houses and retail companies, all of which regularly need to bring in foreign talent on a temporary or permanent basis.
“I think one of the tricks, at least on the outbound work, is having a really strong network of competent counsel around the world on which you can rely,” Shechtman noted.
While Pryor Cashman doesn’t have contacts in every country, Shechtman says he can call on about 30 law firms around the world, in western Europe, China and the Far East, South America, and Africa.
“We’ve built this very substantial practice, which fits in. It works here and we generate a great deal of work from our own client base,” Shechtman said.
The immigration practice started in 2009, when the firm got sick of referring out the work that kept popping up. International elements of the practice arise in a number of ways. The firm has a lawyer in Los Angeles, for example, who does a lot of international arbitration in the film business.
“There are limited areas where we can have an international presence or involvement, but there are limitations on our abilities to do cross-border transactions without relying on other firms. And I think that’s a reality for most midsize international firms,” Shechtman said.
Handling It Stateside
Tarter Krinsky & Drogin hired partner Giuliano Iannaccone to start an international practice for the firm in 2011. The initial focus was on an Italian client base, capitalizing on Iannaccone’s Italian roots and legal training. The practice has since expanded to include China as well.
The practice, led from the firm’s New York office, is a mix of inbound and outbound work. Iannaccone and the team advise Italian and Chinese companies looking to do work and invest in the United States, and work with local counsel to assist those corporations in their own jurisdictions.
Iannaccone, whose native language is Italian, said the firm’s international work really grew out of the language capabilities and cultural understanding some of Tarter Krinsky’s partners had with the foreign regions the firm serves.
“I think the understanding of the cultural differences between domestic clients and international clients is very important,” Iannaccone said. “It’s not just food or language, but the intangible aspect that defines what works and what doesn’t work in a business interaction with someone from a different culture.”
Lawyers in the United States can’t judge clients for asking questions that may seem obvious, he said. The differences in the rule of law from country to country can lead to confusion, and international clients must be made to feel comfortable asking anything. And that is often more achievable at a midsize firm with lower rates, he said.
Because most of Tarter Krinsky’s international work is inbound into the United States, the firm hasn’t yet felt the need to open an office abroad. The growth in Iannaccone’s practice is reliant on his existing network of clients—and those clients spreading the word.
“If I were to rely on more regional referrals from local contacts, I would assume that having someone on the ground for purposes of business development might make some sense, but I don’t see that being a need for purposes of servicing the clients,” Iannaccone said.
The story might be different for firms with more of an outbound practice, he said. They might need an actual office.
Opening Up Shop
One firm type that seems more willing to open an office abroad is the intellectual property boutique, and Westfield, New Jersey-based Lerner David Littenberg Krumholz & Mentlik fits that mold.
The 60-lawyer shop has opened two outposts in Asia in the last decade.
“There was a conscious decision made that … our size was not going to be a detriment to us,” Lerner David co-managing partner William Mentlik said. “We believed that it might actually be to our advantage.”
“We decided as a small firm we were going to go right to where the action is and develop a name for ourselves,” he added. “China doesn’t think of us as a small firm.”
The Guangzhou, China, office, opened in 2010, came about as firm leaders saw technology companies based there seeking to protect their IP in the United States, according to Mentlik, who said the firm does not practice in China or advise on Chinese law, but rather engages Chinese clients in connection with U.S.-based legal work. The office there has one full-time attorney but is “not a law office per se,” he noted.
“It’s very important to have the face time with the Chinese companies,” Mentlik said. “There’s a lot of competition with other U.S. firms.”
The work, Mentlik acknowledged, has “developed more slowly than we thought it would,” but “we have turned that corner,” and are representing Chinese companies in stateside litigation matters currently, he said.
He noted the firm has yet to see any direct impact from the Trump administration’s stances on international trade.
The 2014 opening of the firm’s Tokyo office was tied directly to a client need. The firm has long done procurement, patent prosecution, licensing and litigation work for Sony. And it was Sony’s suggestion that the firm open in Tokyo, according to Mentlik.
“In Japan, as contrasted with China, we have actual registered U.S. patent attorneys on the ground and practicing,” Mentlik said. “What you find is, there are a fair number of U.S. expats living in Japan.”
The firm has since developed some business in Korea, and has a native Korean partner practicing in the United States, though there are no immediate plans to open an office in that country, Mentlik said.
With clients in Asia, the firm has found that a physical presence matters, as executives expect to have personal contact with counsel.
“There’s nothing like face-to-face contact to develop client relations,” Mentlik said.