Going global

The internationalisation of Reed Smith. By Marie Armstrong

In 1877, two lawyers called Knox and Reed formed a partnership to practice law in Pittsburgh, in the US. Pittsburgh was the Silicon Valley of its day and they thrived there during an era of unprecedented growth in the coal, iron and steel industries. Pittsburgh may have been a good place to start a law firm, but its management was wise enough to realise that it should continue expanding to serve clients.

Today, Reed Smith represents organisations in multi-jurisdictional disputes, strategic cross-border transactions and regulatory matters. It has lawyers practising in the US, the UK, France and Germany. How exactly did it make the complex transition from local to international firm?

Diversity matters
By 1972, Reed Smith had 90 lawyers, predominantly based in Pittsburgh. Before geographic expansion came the need to diversify the workforce, as the immigrant population in the US increased. Ethnic minority and female lawyers were hired, new practice groups were created in response to client demands and a wider range of services was being sold to clients.

Today, attracting and retaining a diverse workforce continues to be one of the pillars of Reed Smith’s strategy. Large UK corporates and financial institutions, such as Barclays, have also recognised that diversity at all levels of an organisation is fundamental to world-class business. As a result, they are now demanding details on the gender and ethnic make-up of law firms in their external panel reviews. In response to these trends, Reed Smith has a director of diversity, to ensure that recruitment efforts are broadened, issues unique to minority lawyers are addressed, and that internal support structures exist for minority lawyers. Practical steps that have been taken include:

The creation of a women’s network. In response to suggestions from female associates, a network for female clients and contacts has been introduced. Regular events are held based on themes of particular interest to women, such as dress codes in the workplace or how to make an impact. Workshops have also been facilitated for female lawyers to help them with issues such as combining work with having a family, and career-advancement advice;
Setting up an associates’ committee. This provides a regular forum for communication, between diverse associates and the firm’s management, on important matters such as professional development. It is essential for management to understand exactly what it feels like to work at Reed Smith during the various stages of an associate’s career. With this candid feedback, changes can be made to ensure that all associates have a challenging and rewarding career path;
Development of a trainee knowledge bank. Trainees pointed out that the research they were undertaking was a valuable resource which could be put to wider use, so a knowledge bank has been created to share their findings. The trainees are also motivated by the fact that they can make a difference, even at a junior level, in improving the way the firm works.

Drivers for growth
In 1975, The Washington DC office was established in the US, as Reed Smith sealed its first merger with a local two-partner firm specialising in federal antitrust matters. The firm now had a structure to service the DC needs of Pittsburgh clients. In the final expansion of the 1970s, the firm selected a Philadelphia merger partner in response to significant changes in technology and law.

The firm continued to ‘de-localise’ (a term coined by the managing partner of the time) to serve the emerging needs of clients. Management made some aggressive moves to ensure the firm’s longevity: partner promotions were carefully scrutinised, timely billing and collecting was exhorted and profitability was increased, but not at the expense of collegiality. Essentially, the firm became more nimble and businesslike.

The first director of practice development was recruited in 1983. Bringing in clients was no longer a job merely for the partners – all lawyers were encouraged to start thinking as salesmen for the firm, as well as being providers of quality legal services. The recruitment of non-lawyer professionals began when a chief marketing officer replaced the partner director of marketing. This was in recognition of the fact that specialist help from outside the partner ranks was called for to shape the business commercially. De-localisation progressed, fuelled by cross selling new areas of work to existing clients and lateral entrants to the firm.

The mechanics of a successful merger
By the end of the millennium, fewer than half the firm’s lawyers were based in Pittsburgh and Reed Smith set its sights on opening a UK office in London. In 2001, the firm agreed to join with 60-lawyer City boutique Warner Cranston, which had a reputation for being unusually entrepreneurial and shared with Reed Smith a client-oriented, collegiate culture. The merger was seen as highly successful because:

The firms had a huge amount in common, including practice-group structures and clients in the insurance, banking and finance and e-commerce sectors;
Senior US partner Tom Todd moved temporarily to London to oversee the integration and worked alongside the UK lawyers, providing advice as required on how best to navigate the firm and exploit the cross-selling opportunities available in the US;
Communications to staff and lawyers regarding the merger were regular and transparent, ensuring no attrition;
Compensation structures were revamped to provide incentives for the firm’s lawyers to find and develop new relationships, but most importantly, to obtain new business from existing clients. This, coupled with the open, ‘no ego’ culture, fostered a wave of transatlantic cross selling, which grew by 450 per cent in four years;
The staff management capability was upgraded again, with the appointment of a firm wide chief operating officer, a chief technology officer, a chief human resources officer, a chief strategy officer and a chief finance officer. The latter two roles were also based in the UK, making Reed Smith the first transatlantic firm to appoint non-US staff into prominent roles;
Management was not afraid to have others share in developing the vision for the future. That shared vision led to the creation of some unique innovations, such as Reed Smith University (RSU), a programme for the development of lawyers and staff facilitated by the Wharton School of Business.

The value of training
RSU is the firm’s biggest commitment to the development of its people, but its ultimate objective is superior client service. It has a curriculum focused on leadership, business development, technology, professional support and the law. As Reed Smith has grown, the curriculum has sought to deliver training that will equip lawyers and staff with the skills they need to serve clients in an increasingly international environment. Courses now available include:

Cross-border deal management – for example, the key points of French mergers and acquisitions law for UK lawyers, or a summary of the US judicial system for European lawyers;
Multi-jurisdictional mock pitch exercises;
Dealing with different cultural norms;
Language tuition appropriate to the jurisdictions where the firm has offices.

While RSU was originally designed to nurture Reed Smith staff and lawyers, bespoke training sessions based on courses offered by RSU are increasingly being made available to key clients. They can see the value in being serviced by teams who know their business; teams that are centrally coordinated and accustomed to working with one another. In opening the doors of RSU to more clients in the future, the firm will be able to sharpen ideas for new client-service models and benefit from a growing number of client facilitators, which will provide an in-house perspective on client service.

Developing an international mindset
People swaps and transfers to other offices are also commonplace, both at partner and associate level. Business-development managers also spend time in jurisdictions that they need to ‘sell’, meeting the lawyers and hearing about their practices so they can position them both internally and externally. Cross selling is ultimately about how comfortable people feel in referring you to their client or contact, so enjoying face-to-face time with counterparts in other offices is important if you want people to act like a team. Reed Smith has learned to utilise firm retreats well, setting aside time for people to meet socially as well as professionally. Individuals were encouraged to meet new faces from other offices or practice groups through ‘buddying’ or ‘speed-dating’ exercises designed to improve the collective knowledge of the firm.

European expansion
With the opening of offices in London and the Midlands, Reed Smith was able to expand further into Europe, opening in Munich in May 2005, with a team from Ernst & Young Luther Menold, and Paris in November 2005, with a team from Rambaud Martel.

This year, the firm has announced its intention to combine with Richards Butler, a 250-lawyer London-based firm with a solid reputation and growing media, litigation, international shipping and trade practices. With offices in Greece, Paris and The United Arab Emirates, the firm is now becoming a truly international player, enabled by:

A management team that communicates well and looks to corporations rather than law firms for successful business modelling;
A culture that fosters self-examination, listening to clients and constant improvement – it is the firm’s ability to drive through permanent change based on client feedback which sets it apart;
A group of senior managers and chief officers who are trusted by lawyers to act as a team in driving the firm forward;
An understanding of how cross selling works and an ability to offer pre-emptive services to clients to help achieve their commercial aims;
A sense of mutual trust among professionals. Having teams working on pro bono initiatives and charitable outreach are two of the most effective ways of bringing people together to build trust. For example, the firm recently partnered with Tate & Lyle to support under-privileged children in the London borough of Newham.

The firm is about to embark upon another crucial stage in its development – implementing a firm-wide client-relationship-management (CRM) system to improve the capture and sharing of client information. The size of the firm dictates that much of the information sharing that went on informally must now be encouraged explicitly and the CRM programme will give structure to that.

As the firm begins to integrate with Richards Butler, the CRM initiative will seek to drive the high level of personal service that Reed Smith’s clients have come to expect. Leveraging on the CRM skills brought to the firm by Richards Butler’s director of clients and markets Meirion Jones, the firm will assess how the existing feedback programme for top clients can be better exploited to feed into client-development strategies and the firm’s pitch process, for example. Thought will also be given to the analytical tools required to ensure that client-facing decisions are made on an informed basis.

Once the deal with Richards Butler is official in January 2007, the firm’s largest office will be London instead of Pittsburgh – a testament to the firm’s belief in being present in the right financial markets with the right critical mass. Competition in this new arena is acknowledged; the firm will not be complacent. Can Reed Smith build on its past success to set the right strategy for future growth, as indeed it believes it can? Time will tell.

Marie Armstrong is European business development director at Reed Smith. She can be contacted at marmstrong@reedsmith.com