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Baker & McKenzie Global and EMEA Chairs Discuss CEE

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We took the opportunity of the presence in Prague this month of Eduardo Leite, Chairman of Baker & McKenzie's Executive Committee, and Gary Senior, the firm's Chair for EMEA, for Baker & McKenzie's EMEA Partners' Conference, to sit down with both of them. These conversations provided a rare opportunity to explore Baker & McKenzie's expectations and plans for CEE, the ways the firm handles the political and financial crises in the region, and the possibility of expansion into new CEE markets.

Background and History

Eduardo-Leite.jpgBaker & McKenzie was among the very first firms to develop a truly global presence, and it maintains offices in more countries around the world than any other firm. It was also among the first international firms in CEE, where its first office, in Budapest, opened two full years before the Wall fell. At the moment the firm's CEE presence includes Budapest (1987), Moscow (1989), St. Petersburg (1992), Warsaw (1992), Kyiv (1992), Prague (1993), Vienna (2003), and Istanbul (2011). The firm has 413 lawyers and 88 Partners in CEE (although the firm does not officially distinguish CEE from its larger EMEA territory). 

The Brazilian Eduardo de Cerqueira Leite joined Baker & McKenzie in 1979 and became a Partner in 1996. He served on the firm's Executive Committee from 1999 to 2003, and he chaired the Firm’s Policy Committee in 2005. He was the Managing Partner of the firm's four offices in Brazil from 2003 to 2010, and he has led the Firm’s Global Energy, Mining & Infrastructure Industry Group. Leite became Chairman of the Executive Committee in 2010 and was reelected to the post in 2014. His current term will expire in October 2016.

Gary Senior has been a Partner in Baker & McKenzie’s London office since 1992 and was Managing Partner of that office from 2003-2013. He is a member of the firm's 8-person Global Executive Committee and Chair of the EMEA region. He was Managing Partner of the London office from 2003 until 2013. 

Global Strategy and Selling Points

Both Leite and Senior expressed pride in Baker & McKenzie's many offices around the world, although Senior conceded that the firm is no longer unique in that regard. “The market in many ways has moved towards Baker & McKenzie,” he said, “so if you go back many years, some may have viewed us as a sort of strange organization, with offices all around the world, but that's not so strange anymore. But there's more competition. Let's be honest, however – the market for legal services is also much bigger than it was.”

Although Baker & McKenzie is well known for its global reach, both Senior and Leite believe that the firm stands for much more than that. Senior said that “our aim is to be the premier global law firm. We think that we define what a global law firm is all about, to be honest.” Leite was hardly less confident, saying: “We are the cross-border firm, for clients who have issues, like an acquisition in many jurisdictions, or who require a review of thousands of relationships with dealers or suppliers, in 25 jurisdictions, we are the ones who can do that faster, better, and more efficiently, and that's what we do – that's our distinguishing factor.”

In addition, they both noted that the firm's strategy was to staff as many of its offices as possible with local lawyers rather than expatriates, allowing the firm – in Leite's words – to provide “a global standard with local depth.” He elaborated: “We want to have, in each of our markets, people who are locals. They are local but have global training, and a global mindset, and global standards. So that when our clients look at us, and they want us to help them in say 25 jurisdictions, 40 jurisdictions, what they're going to see in Istanbul is a Partner who has, for example, a Ph.D. from Germany, and worked in London, but he is Turkish. And that makes a huge difference.”

Indeed, Leite claimed, the firm's strategic focus on local people has allowed it to adapt to changes that sometimes force other firms to close offices and withdraw. He explained that, “for us, it has been a huge competitive advantage in many of our markets to have local people that have a local practice. When you have both an international and a domestic practice which competes with local firms that often don't have an international practice, then you create a sustainable stream of revenue whether the overall market is buoyant, like with privatizations in CEE, or when the business is weaker, like in the global financial crisis.”

Used to the Heat: Russia and Ukraine

Gary-Senior.jpgBoth members of Baker & McKenzie's Executive Committee admitted to – in Senior's words – “keeping a careful and supportive eye” on the firm's offices in Ukraine and Russia, but both insisted that no dramatic changes or layoffs were planned anytime soon. Leite said that, “whatever we had to do we already did, in terms of adjusting to the reality, adjusting the costs, and knowing that our business plan had to be changed. So we're doing well within the circumstances.”

In fact, although a number of international firms have reduced the size of their Moscow offices in the past 12 months, Baker & McKenzie's office in the Russian capital has actually grown somewhat in that period, supporting Senior's claim that the firm's Russian and Ukrainian operations “have held up surprisingly well in many ways.” 

Senior isn't oblivious to the current situation – he concedes that “I'd be lying if I said that the business is not affected, because it inevitably is” – but he chooses to highlight the positive. “One of the things we do focus on is the opportunities that arise from this. So there are still opportunities to acquire assets in places like Russia and Ukraine. Asset values are down. There's also the opportunity to look East as well for Russia, to look to China and places like that. So while there's something about managing the challenge, there's also something about looking to see what opportunities are going to arise.

In addition, of course, Baker & McKenzie may have more experience negotiating such crises than any other firm on the planet. “One thing to keep in mind with our firm is that we're in a lot of markets,” Senior said, “and at any one time, we're in markets that are challenging. We have a Cairo office, for example.” As a result, he noted, “as bad as a situation can be in a market, Baker & McKenzie can point to an office with greater challenges.” 

And in any event, Senior noted, to some extent dealing with financial pressure and increased competition is part of the Managing Partner's job description these days. Although conceding that Russia and Ukraine are extreme examples, Senior explained, “if I talk to our people in markets like Hungary, or the Czech Republic here … their challenges are not so different to the challenges you find in Western Europe.” He laughed. “There are few markets we're in, where you talk to the Partners and they say, 'it's just so easy!'” 

Expansion in CEE?

Both Leite and Senior drew attention several times to the increased investment in CEE from China, particularly in Hungary (where, Senior pointed out, the firm has two native Chinese lawyers: Senior China Advisor Chen Chen and China Advisor Xiaoyou Xi). Senior said, “Hungary is a country where we see real interest from Chinese investment.” 

Then the subject turned, finally, to CEE countries the firm is not in, including Romania, Serbia, and the Baltics. Romania is perhaps the most notable gap in Baker & McKenzie's EMEA map, as its economy is essentially equivalent to that of the Czech Republic, and is significantly larger than Hungary's and Ukraine's, where Baker & McKenzie has been for many years. Indeed, five of the firm's global competitors have well-established offices in Romania (a number that was even larger before both Gide Loyrette Nouel and White & Case withdrew from the market last summer).

Senior conceded that he and his colleagues were approached from time to time by Romanian law firms proposing tie-ups, but explained that “we're probably more cautious about opening new offices than people think we might be, to be honest. It's a serious endeavor, and an investment. Not so much the money, because we're a big firm financially, but the management time, that it takes. You can name a lot of places where we might be and we're not, particularly in the more Emerging Markets …. So we have to be reasonably selective about where we might go. That's not to say we might not, and Romania would probably be the biggest economy that we're not in. I think if you had to pick a place, that would probably be the place ... but it's about prioritization and opportunity costs. That's the real issue. Israel is another place, frankly. So you can name quite a lot of markets, even just in our region, before you get to other regions, where we potentially could be.

As for the Baltics, Senior said, “at the moment I think we'd regard them as too small. There's a question as to whether you could cover all three from one office, or whether you'd have to open one in each country.” In addition, he pointed out that, despite their size, the Baltic legal markets are “quite active,” and highly competitive. The suggestion seemed to be that Baker's presence, at least at the moment, is not necessary.

Wrapping Up

We appreciate the time given us by Eduardo Leite and Gary Senior, and we invite senior management from other global law firms to match their commitment to the region and to our readers by speaking with us. Many thanks also to Michael Evans, Baker & McKenzie's Senior Communications Manager for EMEA, for his help in coordinating these conversations and providing additional information about the firm's presence in the region.