Welcome back to the Big Law Business column on the changing legal marketplace written by me, Roy Strom. Today, we hear from Baker McKenzie’s chair about some longer-term changes brought on by the pandemic. Sign up to receive this column in your Inbox every Thursday morning.
I last spoke to Milton Cheng before the pandemic. It was November 2019 and he’d recently been named Baker McKenzie’s chair. He was starting to think about a refreshed strategic plan for the 5,000-lawyer firm.
A lot has changed in the last 18 months, and that’s likely one reason Cheng is still working to update the formal strategy. That process is expected to be completed over the next few weeks, Hong Kong-based Cheng said in an interview this week.
In our conversation, Cheng also detailed his newfound approach to change management and his view on how Baker McKenzie will compete in a U.S. market where many elite firms are coming off their best performance in over a decade.
Cheng’s strategy will try to take advantage of some of the unexpected nimbleness the firm, which operates in more than 50 countries, showed during the pandemic. Cheng wants the firm’s partners and employees to embrace even more change by developing what he calls a “growth mindset.”
“With our platform being as broad as it is, and so much of our idea generation coming up from markets and teams around the world, we are trying to build a culture of ideas percolating to the top so they can be quickly leveraged and spread to other parts of the organization,” Cheng said.
I write often about how partners’ reluctance to change can hold Big Law firms back. But partners had no choice about the changes thrust upon them by the pandemic. And those changes didn’t end in catastrophe. Capturing that attitude could be a boon for firms’ change efforts going forward.
“Having a ‘growth mindset’ means together challenging ourselves and our teams to embrace change and have the confidence and determination to continuously innovate, adapt, and reinvent ourselves to meet our clients’ needs and respond to the changing market,” Cheng said.
A year ago, Big Law partners wouldn’t have dreamed of allowing associates to work entirely remotely. And many partners have long been reluctant to invest in technology-based tools for their practices.
But now, Cheng said partners have seen that associates’ productivity remained high while they worked from home. And the new reliance on technology to function at work every day has proven its worth to naysayers.
“The focus on the use of technology over the last 12 months has allowed me to bring this to our partners’ attention and generate enthusiasm and support for us to move that ball forward,” Cheng said, citing as an example the firm’s partnership announced in October with artificial intelligence firm SparkBeyond Ltd.
Like most law firm leaders I’ve talked to, Cheng doesn’t expect remote work to last forever. The blurred line between home and work has been difficult for some lawyers, he said, and highlighted the importance of resiliency and mental health. But he said there will be some lasting effects, such as more meetings being held virtually.
“We are looking at how we use the good things we learned from that and not get carried away thinking this is the permanent solution,” he said. “It’s not necessarily sustainable.”
Baker McKenzie’s revenue has traditionally been split about evenly across its three main geographies: the Americas, Europe and the Middle East, and Asia. The firm in October reported its revenue was virtually flat at $2.9 billion for its latest fiscal year, which ran from June 2019 to July 2020.
The firm has long sought a larger presence in the U.S., and in 2019 it made a splash by adding the former leader of Skadden’s Silicon Valley M&A team, Leif King.
Cheng acknowledged the competition for U.S. lawyers has become “fierce,” following what he described as “unexpected bumps” in many firms’ financial performances last year.
“Everybody can see the big numbers coming out of some of the Big Law elite,” he said.
The market has started to segment, he said, and is rewarding firms that have been disciplined in their cost management and focused on clients in high-growth industries such as healthcare and financial services.
Cheng said Baker McKenzie’s strengths include its practices in the life sciences and technology industries, which he said it will continue to build out through lateral hires, as well as focusing on doing major projects for global companies across borders.
“That will be our position in the post-pandemic normal,” he said. “There will be a role for people who are product specialists and who do deals, but there will definitely be a place for the firm to bring that full service offering particularly to sectors that are growing quite quickly.”
Worth Your Time
On Big Law Financials: Latham & Watkins was the latest Big Law firm to report a blowout 2020. The firm says its revenue grew 15% to $4.3 billion and its profts per equity partner rose nearly 20% to $4.52 million. Chair and managing partner Rich Trobman said demand for the firm’s services grew significantly across its transactional, litigation, and regulatory practices.
On In-House Pay: Britton Worthen, chief legal officer at electric truck maker Nikola Corp., earned nearly $80 million in stock, Brian Baxter reports. The payout comes after Worthen last year agreed to forego a $250,000 salary at the company, which has come under fire due to claims its former chairman, Trevor Milton, misled investors.
On Pandemic Pressure: Ruiqi Chen spoke with Clorox Co.’s chief legal officer, Angela Hilt, about how her legal department has helped the company meet the unprecedented demand for its products that spiked during the pandemic. Clorox turned to outside counsel secondments to handle the resulting surge in legal work.
On SPACs: White & Case hired partners from Latham & Watkins and Kirkland & Ellis who will boost its practice advising on special purpose acquisition companies, or SPACs, Meghan Tribe reports. As I reported a couple weeks ago, White & Case has been one of the busiest firms advising on SPAC IPOs since the firm hired a leading team in the space from Winston & Strawn.
That’s it for this week. Big Law Business will be off next week, but back in your inbox March 25.Thanks for reading and please continue to send me your thoughts, critiques, and tips.