The Nuts And Bolts Of An International Legal Practice

by Sir Trevor A. Carmichael, Q.C.

INTRODUCTION

Colleagues, it gives me great pleasure to bring today's series of panel presentations to a close with a discussion of what our programme graphically notes as the "nuts and bolts of an international legal practice".  Coming at this time after lunch and after captivity at the Hilton for a full day, it therefore imposes an obligation that I neither keep you long; or allow the earlier carbohydrate intake to dominate your desire to stay awake.

International legal practice is multifaceted and as I ruminated yesterday on it in terms of its many dimensions, I could not resist the thought of porcelain - and more particularly Chinese porcelain.  For like that, sometimes very beautiful ceramic material, which is made up by heating many raw materials, including clay; an international practice requires a true mix of various attributes which eventually produces a result which is attractive and profitable to the client as well as to the practitioner.  In these next thirty minutes or so; I may therefore take us into the world of porcelain - and particularly Chinese porcelain - so as to make my remarks hopefully more clear and consistent.  I propose to first examine some of the basis attributes which go in to such a practice and then to explore a new cutting edge opportunity which enterprising attorneys may wish to pursue - and which is not being presently pursued in Barbados.

 

COMPONENTS AND ATTRIBUTES OF INTERNATIONAL PRACTICE

Let us first ask ourselves as to what comprises an international legal practice, for there is here no mystery.  It involves servicing non local and sometimes local clients in the areas of our international business sector: international business companies, international banks, international insurance, mutual funds, trusts, shipping, trademarks and patents to name a few.  Servicing of these products in so many ways mirrors that of servicing the local business sector -  the research and writing of opinions, the drafting and sometimes negotiating of agreements, and the company secretarial work related to ensuring good corporate governance of various corporate entities, to name but a few of those tasks and responsibilities.

To ensure that such tasks are successfully undertaken, a variety of personal and professional attributes become prominent. I start with some personal professional attributes which take on prominence in this particular arena - courtesy and humility.  We as lawyers are notoriously prone to sometimes take ourselves just a little too seriously and it may tend to be mistaken for self assurance extended in to arrogance.  Bearing in mind that in an international practice, one is often communicating more frequently with foreign lawyers, and persons who in may cases, one has never seen, it becomes even more critical that we adopt and adapt styles of behaviour which agreeable and collegial.  This feature of the international practice is critical, particularly since much contract is not only in correspondence, but increasingly more and more in telephone calls and teleconference calls where many are gathered - and with inappropriate behaviour - few will be chosen!!  In this area, we need the translucence yet the resonance of the best in Chinese porcelain.

Naturally, more is required than looking, feeling and being good.  For one must also buttress those communication skills with the clean and clear drafting skills which effectively practising in the domestic environment also requires.  For remember that commercial agreements are become more complex as business options have become wider, and the resulting high demands of clients - international and domestic - therefore need to be met.  Again, one is operating against a backdrop where one is being judged based on the written and spoken word, and not on the basis of friendship or a presumed knowledge because of where you went to school or which and whose parties you attend.  The international legal environment relies on strict performance criteria.  IT is not unlike the Ven     Philanthropy on the new philanthropy of the twenty first century.

To be sure, sometimes these parameters are extended in circumstances where international clients and their professional advisers will visit Barbados and conduct interviews in their selection of service providers.  These interviews will look for knowledge, skills as well as organisational capacity - a topic to which I shall return later in this presentation.  But at the end of the day, it will no doubt be a choice of where that personal chemistry softly collides; and so one should never be disappointed if one has both performed and interviewed well but were not selected.  Sometimes it is a blend of the perfume or the colour of the tie which makes the difference.

The important professional attributes extend to a clear grounding in the law- a feature again not dissimilar to what is required in a local practice.  However, the responsibility is extended in the international practice where not only domestic law, knowledge is required but also a keen and critical appreciation of how it interfaces with foreign law.  This feature assumes even greater prominence in a jurisdiction such as Barbados where we have a plethora of double tax treaties and many of our international clients and transactions are inextricably intertwined with those treaties.  While a high level knowledge is an added bonus, it is however a necessity to be able to at least posses basic knowledge - such as what is exempt surplus?; what truly is the Exchange of Information?

            Such knowledge must be current, bearing in mind that the international business environment is dynamic.  Take for example a simple concept such as the Exchange of Information over the years and how it has affected Barbados from the treaties such as in the Barbados/US Double Tax Treaty, to the CBI exchange of agreement, to the most current amendment of the Income Tax to meet the new TIEA movement and requirements.

            Yet personal and professional skills extend post courtesy, humility, knowledge and being au courant with the last and the latest in the journals and in practice.  It also extends to what may be termed the AVAILABILITY AND ADAPTABILITY factor.  For again like good Chinese proclaim one should be able to achieve that multifaceted use of kitchen, teeth, sanitary and decorative wear into objects of fine art and tiles.  This adaptability may require sometimes changing one's work habits and even one's work hours.  I always tell the true story that during the colder months of October through March, many new international referrals from North America come by way of telephone calls from foreign lawyers between the times of four o'clock and six o'clock in the afternoon.  In North America work is coming to a close, the workday too is almost at an end and it is indeed also a good opportunity to embrace the aspiration for warm weather by talking with a warm weather colleague on a potential new matter.  Indeed, even existing international matters which are in the North American axis will see heightened teleconferencing at that time of the evening.   If you tend to leave early or you have not invested in the technology of call forwarding - or you have a line that still rings busy - then you have clearly restricted your availability to a significant segment of international legal work.

            I could not conclude this opening section without adverting to the need for a great support staff who are truly empowered and who constantly remain your eyes and your ears.  One's support staff in the present day office is critical and key to an effective practice.  While it is also very important in a local practice environment, it takes on an even more critical dimension in the international sphere where answers are needed quickly, and results are expected with no excuses for non performance.  Even though many boutique law offices are turning to the virtual type scenario, yet the type of international work undertaken in Barbados still requires a cadre of adjunct staff members who keep the fires burning brightly - not unlike the blazed and fired porcelain at the high temperatures of  circa 1200 celsius (2,192F) and 1400 celsius (2,552 F).

 

THE ORGANISATION DIMENSION

I now turn to some specific organisational areas of the international practice.  Not surprisingly, I deal first with technology.  For clearly, the 1980 introduction of the personal computer and the latest technology innovations of the internet have made lawyer client communications virtually seamless. It is impossible to over estimate the importance of effective technology to an international practice, and the role of such technology as an enabler of change.  For areas such as corporate administration and trusts thrive on the efficiencies of automated technologies which minimise the highly manually intensive and costly front office and back office processes.  Notwithstanding the improved efficiencies, with the best in technology, there are still some technology terror stories.  And although we should not fall captive to them, I yet remind you of one such story.  A 2010 investigation found that the total cost of the U.K. Government's most notorious IT failures was equivalent to more than half of the budget for Britain's schools. The most costly programme was the huge £12.7 billion IT scheme used to revolutionise the NHS.  The investigation further revealed that a mere 160 health organisations out of about 9000 were using electronic patient records delivered under the scheme.

We must however not be disarmed by that particular government's misuse of the technology in that one area - technology is truly critical to the international practice of law.  We have great service providers in this region, and one such provider based in Cayman and the BVI was recently recognised by Microsoft as the "Information Management Partner of the Year" for the Latin American region - ahead of competition from 14,000 partners in larger markets such as Brazil and Mexico.  Trading as VIEWPOINT, a large number of Cayman international law firms and service providers are using the VIEWPOINT ENTITY ADMINISTRATION solution as the vehicle for administering companies, trusts, partnerships, foundations and funds.  There are other providers but their efficiencies are a sine qua non in the international law practice and the wider and extended service provider options.

Yet another organisational area is that of strategic planning and marketing.  Whether one is a large firm or a small boutique operation, one is always forced to ask three questions:  Who are we?  Where should we be going? How do we get there?  And clearly unless one is able to answer the first question, proceeding to the second question becomes useless and a non sequitur. It is useful to develop a strategic plan (even only if in your head).  It will cover critical areas for the international practice: firm governance, administration, economic analysis of profitability, practice management, firm growth, firm culture and of course, the firm's ongoing marketing.   Strategic plans are getting more and more sophisticated and some today even incorporate psychological instruments to evaluate the working relationships among the lawyers and support staff in the firm as well as the extent to which the firm's culture allows for change.

Very often a marketing plan will accompany a strategic plan; and it will seek to identify where the firm should target its future success, and how it will attempt to meet that success - including the vital area of how costs will be allocated in the various spheres of action.  An international law practice cannot neglect this area, for although much referral work is built on the quality of previous work, efforts would still have been required to have first attracted that work.

Yet another area of consideration in the international practice of law is that soft sassy and sexy dimension of BRANDING.  For at its core, branding represents all of the promises and perceptions which a law firm wishes its clients to believe - and indeed to cherish. The presumption is that for a branded firm, it provides comfort and security in terms of the quality and consistency of the services which the client knows he or she can accept from that firm. Branding is more than advertising or promotional materials and what they say about the firm.  Rather, it is how the client reflects back on the firm and its services.  It is very much a visceral concept.  It is not a slogan, it is not an ad, nor an ad campaign.  It is what the client perceives it to be ; not necessarily what the firm wants the client to believe.

For an international law firm, a strong brand can often result in better profitability.  A recent U.K. study showed that brand recognition in a professional service industry is worth 10 to 15% premium in fees (see the charge out rates  of "magic circle" U.K. firms Freshfields, Clifford Chance, Linklates, SJ Berwin, Lovells).  I suggest that in the larger international environment, it may be even more than 15%.  However, establishing and maintaining a strong brand requires a significant investment in the time, people and money.  For it is not "only" a marketing function.  Indeed, it is key for an international practice, and it is no surprise that Baker and McKenzie is "One World, One Firm Connected"; Jones Day is "Legal Minds, Global Intelligence"; and at Wilson Sonsini it is appropriately: "Strategic Partner at all Stages of Growth".  But the question at the end of the day which one must ask onerself as an international law firm or a firm practising law lat the international level - "Is it true?  do we actually do what we are saying?" Is it important to our clients?  Are we unique?  Will these statements last over a period of time?

I would wish to end the substantive part of this presentation by highlighting one area which promises growth and which if carefully guided could be an important development in the Barbadian international legal market.  In this regard, I refer to the not so new trend of legal outsourcing.  For many years many large American and British law firms have recognised the benefits of outsourcing the back office functions of payroll, copy centre, mail room, food service travel and others.  More recently outsourcing is extending even to the law practice itself.  Some firms are relying on large teams of outside lawyers for areas as diverse as legal research and review of discovering documents.  In the U.K., Lovells has for a long time sent out its real estate matters to British firms with lower rates. More recently, law firms and departments have outsourced administrative and substantive legal work to offshore destinations, particularly to India. In addition, the Philippines, South Africa and Israel have also been beneficiaries of such outsourcing.  All of these jurisdictions, like Barbados, have large English speaking populations and all except Israel have systems derived primarily from common law - but Israel, remember, has many U.S. trained lawyers.  Indeed, the research group Value Notes tells us that India's Legal Processing industry generated US$440 million last year. I could spend the rest of the afternoon on this particular subject but let me assure you that it is an area  ripe for development here in Barbados ……….for all those reasons.

 

CONCLUDING REMARKS

In concluding, I return to porcelain and more specifically to a special antique Porcelain China Vase which was found in a house clearance in Pinner, one of England's genteel suburbs and which sold at £43 million in a small auction room.  It shook the international art market before it even got in to the newspapers.  For this precious porcelain vase was kept on a wobbly case, having been brought back to England by an "adventurer English uncle" from his travels.  That the purchaser until recently had not come up with the cash was not surprising in a sale of this kind; but it surely added to the intrigue of the 16 inch tall vessel with bright yellow shoulders and a pale green vase, enswirled everywhere with decorations which has wrapped within it many questions.

It comes at a time when the Chinese art market is seeing unprecedented high prices.  In October of last year, Sothebys sold a similar Quienlong piece (another porcelain vase) to Alice Chen one of Hong Kong's leading art collectors for a smaller US$32.6 million.  Indeed, using auction results as a guide, the Chinese art market had grown by 150% last year with sales in China, Hong Kong and Taiwan worth more than US$8.3 billion.

But this special Chinese porcelain vase has eclipsed all of the monumental financial activity - a porcelain piece, kept on a wobbly book case in a small suburban home!  I suggest to you that we emulate the beauty and strength of porcelain and the vase from Pinner, and that we use our talents in this small jurisdiction, small firms, sometimes even of one person, to achieve the excellence and richness which  knows no limitations of size.