Welcome to a special Wednesday edition of the Big Law Business column on the changing legal marketplace written by me, Roy Strom. Today, we catch up with the recently appointed global chair of Baker McKenzie. Happy Thanksgiving!
Milton Cheng moved to Baker McKenzie’s Hong Kong office nearly 30 years ago because the firm needed more Mandarin speakers for its work taking Chinese companies public.
Cheng had always planned to move back to his native Singapore, so he jumped at the chance to relocate from the firm’s London office to Asia.
He never made it to Singapore, but his career has certainly worked out just fine. He was elected in September as the first Asian chairman of Baker McKenzie.
“My associate [secondment] program was supposed to be two years and it is now completing its 27th year,” the Hong Kong-based Cheng joked.
Cheng’s rise to the top of one of the world’s largest law firms wasn’t an overnight success story. Since 2014 he has been the chief executive overseeing Baker McKenzie’s business across eight countries in the Asia Pacific region.
He takes the reins of the nearly 5,000-lawyer firm at a crucial time as it navigates an increasingly complex environment for global businesses and a fast-evolving legal market. There is also the challenge of taking over following the death of Paul Rawlinson, the firm’s former chair, who passed away unexpectedly in April at age 56.
Cheng is still ironing out his formal strategy for the firm, but he nonetheless had plenty to say.
In a wide-ranging interview with Bloomberg Law, he discussed Rawlinson’s influence, trade and cultural tensions between America and China, and how the law firm market is changing.
Cheng said most of the candidates who campaigned for Baker McKenzie’s chair position agreed that much of the strategy Rawlinson had set out for the firm remains relevant. The other two final candidates, reported by Law.com, included the head of the firm’s Europe, Middle East, and Africa business, Fiona Carlin, and North America CEO Colin Murray.
Rawlinson’s strategy emphasized bulking up the firm’s transactional practice, integrating the firm’s finances across geographies, and aligning its lawyers along industry sectors and key clients.
Cheng picked up other cues from Rawlinson, including a tradition of singing karaoke at work functions. Cheng said he recently serenaded a group with “Daydream Believer.”
“People felt that having an accessible leader is really important,” Cheng said. “And to some degree, that was behind people’s support for me as well. I am a regular guy. I have a regular life. I enjoy regular stuff. And I sing songs as badly as the next guy.”
Cheng said he is proud to be the firm’s first Asian chair. But he stressed that Baker McKenzie has a long history of chairs rising to power from different regions. Jaime Trujillo, the interim chair, is from Colombia. Rawlinson was the firm’s first London-born chair.
Christine Lagarde, elected in 1999, was the firm’s first woman chair. The French attorney, who later headed the International Monetary Fund, was one of the few women at the time to run a top law firm.
“There is no other firm with that track record that I’m aware of,” Cheng said. “Of course I’m proud. But I’m not the last [chair to be] the first of this or first of that. Because we really are a firm of firsts.”
Baker McKenzie’s $2.92 billion in fiscal 2019 revenue is more evenly spread among regions than revenue at most law firms.
“Part of my belief in the strategy we developed three years ago is to grow our pipeline of clients who can best use our platform to be regional and global champions across business lines, [so] we can support them wherever they exist,” Cheng said.
Cheng said between 25% and 30% of revenue in 2019 came from the U.S., which remains the Chicago-founded firm’s largest market, and a “very important” one.
He said the firm would look to hire lateral partners in the U.S. who have relationships with multinational companies. He cited the recent hire of a former top Skadden partner, Leif King, who now heads up Baker McKenzie’s M&A and corporate work in California out of its Palo Alto office.
Besides partner relationships, he said clients are drawn to the firm’s “top-notch” practices, “sheer scale,” and its ability to bring local knowledge to help clients navigate “opaque” markets.
Of course, having offices in more than 75 countries means global troubles can land close to home.
The ongoing protests in Hong Kong are “concerning” for Baker McKenzie and its clients, Cheng said. But changes in geopolitics also represent an opportunity. Shifts in global supply chains, for instance, have helped the firm’s Vietnam office set a record year. Thailand, Singapore and Latin America are also having strong years, he said.
“Whether it’s the Hong Kong protests or general trade war, tech conflict, changes in the global geopolitical and economic environment, it means it makes the world even more complex for people,” Cheng said. “And it requires all businesses to look at potentially alternative supply chains, spreading into markets [where] they may not have been in the past.”
Competitors From ‘All Sides’
Cheng said the law firm market remains “in a state of flux” as law firms learn how to respond to new types of competitors. While many law firm leaders see alternative legal service providers and technological disruptors as primary challenges, Cheng said those represent only a portion of what is coming down the pike.
“Local firms, such as Chinese law firms, are growing very rapidly,” he said. “There is also the Big Four developing their legal capabilities. There is competition from all sides.”
Commenting on the Big Four in particular, Cheng said Baker McKenzie sees their competition increasing in Australia, England, Singapore, and Hong Kong. While there are still barriers to their entry into the U.S. legal market, Cheng said, “I do believe it will happen at some point.”
Even as the Big Four make inroads, he said the advice and legal counsel law firms can provide will always have a place in the market.
“With the scale we have now, I think it is not a question of us being taken over by a Big Four firm, but finding ways with mutual clients where we add value where we can and they add the value where they can. And that may vary from place to place where we operate.”
Worth Your Time
On Leadership: Baker McKenzie is not the only global law firm to name a Hong Kong-based global chair recently. Hogan Lovells elected Miguel Zaldivar to serve a four-year term starting in the New Year.
On Layoffs: Lawyers have not been immune to the cost-cutting at WeWork in the wake of the firm’s failed IPO. Bloomberg Law’s Brian Baxter reports that at least a dozen former in-house lawyers were among 2,400 layoffs at the office sharing company. And at least one law firm executive thinks other in-house jobs may soon be in peril.
On Ownership: The American Bar Association’s Center for Innovation and four other committees have voiced support for expanding ownership of law firms beyond lawyers, my colleague Sam Skolnik reports.
That’s it for this week. Thanks for reading and please send me your thoughts, critiques, and tips.