Legal Business Blogs

HSF leaders plot China launch and US merger amid new strategy

‘Could we have a 1,000 lawyers in China? We could,’ Herbert Smith Freehills‘ (HSF) co-chief executive Mark Rigotti said. ‘But that would be accessing a different client base. A thousand lawyers would be overcooking it. I would like 100 lawyers as then you get cultural and client alignment between high quality local and cross border. Would 100 lawyers in China by 2025 be feasible? Yes.’

HSF’s new strategy, called ‘Beyond 2020’, has just been finalised and unsurprisingly the conundrum of how to tackle the US and China is near the top. The firm is currently exploring how to obtain Chinese law capability, looking closely at the free trade zone opportunities that Baker & McKenzie used late last year to open a so-called ‘joint operation’ with local firm FenXun.

While the firm has been growing its US presence, Rigotti (pictured) said that ‘our strategy recognises that to achieve our vision we need credibility and capability on the ground in the States’. While the firm is ‘not about to ink a merger’ – he admits the firm is open to securing a deal that would transform its US capability. ‘If someone comes along and says we want to buy your house and give you a bigger house, would you consider it? Yes. You would if the house was the right house. Would we do something transformational? Possibly.’

In terms of the bricks and mortar of the firm’s new strategy, put together by Rigotti and co-chief executive Sonya Leydecker, the firm has revealed a broad nine-sector strategy and a string of initiatives to modernise how work is done.

The nine sectors the firm has decided to focus on are:

1. Energy

2. Financial Institutions

3. Real Estate

4. Infrastructure

5. Financial buyers

6. TMT

7. Mining

8. Consumer products

9. Pharma

Rigotti said that the client strategy is ‘heavily influenced by what Goldman Sachs did many years ago where you completely and overtly move to a relationship model rather than a transaction model’. He added: ‘You could narrow down and focus on one or two sectors, Olswang style, or we can do everything Slaughters style and be generalists. We want excellence but we want a focused model. It’s a broad based set of services and we need people to be sufficiently specialised. What’s different day to day? A promotions candidate will be required to pick a sector and provide a business model.’

Partners have also been tasked with sending at least 10% of their work towards alternative legal service models, such as to the firm’s 300-strong nearshoring base in Belfast. Rigotti explained: ‘We see our service delivery changing over time so we’ve challenged ourselves to move 10-20% of what they do into an alternative form of service delivery. Instead of having my really expensive senior associate, push it out.’

This shift will also see the firm launch a permanent alternative legal services hub in Australia, following a pop up in Perth, and a further cost-cost centre in Asia. Leydecker said: ‘The Perth pop up has been a great experiment to see what the appetite is in Australia. We’re coming up with a global solution, not having it all in one place. Perth with continue but the permanent base will be somewhere else as we can’t source enough talent in Perth.’

The firm is also looking to double the number of legal project managers across the firm from 15 to 30 by 2020, and is gearing up to invest more capital in technology and new products. One idea floated as part of the strategy review, which kicked off at the start of 2015, is to introduce a levy on profits or turnover that will be spent on research and development. Rigotti concluded: ‘We’re not turning ourselves into a technology firm but we want to be much more technology enabled. The legal sector is not the most innovative sector, we are quite serious.’