As the chairman of Baker & McKenzie, Eduardo Leite is at the helm of what at last count was the world’s largest law firm, with close to 4,000 lawyers in more than 70 offices around the globe. It has a long history of internationalism since its postwar Chicago roots. This year, as its Toronto office celebrates its 50th anniversary, other global law firms eye Canada’s legal market, attracted by the country’s energy spoils. Mr. Leite was in Toronto recently for a meeting of the firm’s leadership.
What’s it like to be in charge in a time of so much change?
I think to be at the firm in times like these is really a privilege. It is a privilege because the world is changing, not just politically and economically. The emerging world is taking over, and by 2050 we’re going to see all the G7 completely changed and the G20 completely taking over. It is also changing in values and the way organizations operate and fit the new world. I think we at Baker & McKenzie, we got lucky, or finally in 60 years we got our strategy right, because the world is matching our footprint. We’ve been very strong for many many years in the emerging world.
Canada’s legal market still has few large global law firms, with the exception of you and the recent arrival of London-based Norton Rose. Are you surprised your other rivals have so far left Canada’s domestic firms alone?
I think it is matter of time. And it’s a matter of market movement. We started this 60 years ago. Just in the last 10 years, our major competitors from London, New York and other centres have been moving internationally.
At a time when the consensus is that the world in the future will need fewer lawyers, largely because of technology, what strategies are you looking at to push the law firm into the future?
We will continue to grow. We want to grow also in profitability, productivity. We’re investing a lot in technology. The model is changing. The highly-leveraged model is changing. It is not the model of the future. The markets are concentrating. The legal industry is consolidating. I think that in five years we are going to see fewer firms, but much more competitive, much better organized. Lawyers still need to learn how to manage a business. I don’t think we lawyers are trained to manage our business like our clients do.
Clients also want to pay less. They don’t want to pay by the hour, they want to pay for results. Is the firm changing that way too?
A lot. Clients want faster, better, cheaper. And when they say faster, they mean responsive, they mean, ‘Work with me at my pace.’ Not the old law firm model where attorneys took a week to prepare a long memorandum that in the end nobody read. The hourly system is totally inefficient. It was created in the 1970s I think because many clients, especially in North America, had the impression that you work so much, I pay you so much. If you’re efficient I pay you less. It doesn’t make sense, not in today’s world.
We are investing in pricing. We have a new director of pricing to help us to understand. And it cannot be a lawyer because lawyers don’t understand. We have brought in a bunch of project management experts, not lawyers, and they have worked shoulder-to-shoulder with our teams.
For a law firm that is all over the world, the recent push on anti-bribery enforcement from the U.S., Britain and even Canada, must be a key focus.
It is an area that is growing tremendously. What we have seen in the global scenario is clients had to become more international. The emerging world has grown. There is a huge middle class that is brand new in the emerging world. If you look at China, there are hundreds of millions of people that are buying their first car, their first credit card. The same as in Brazil. And that is attracting international business and companies, going outside of their home countries from Europe and North America and elsewhere.
Doing business in the emerging world is always a challenge. When you do business in the emerging world you are subject to changes in government, policies change very quickly and there are political swings all the time. The rule of law not everywhere is stable and easy to understand. In many places you go by what is the mood of the legislature and the judicial system. And in many places corruption is very very dangerous. We have hired former attorney generals, former prosecutors, people who worked not only in compliance areas but in white-collar crime.
Has one of your firm’s key
challenges in recent years been learning to deal with state-owned enterprises from China and elsewhere?
They come from the old habits of a state-owned entity in a domestic market that is subject to government and political interference. They generally have a mentality of someone who has the monopoly in a local jurisdiction. So when they go international and they do business in many locations, they still have that mentality. Especially the Chinese, that are going international very quickly, very strongly with lots of money. They like to see government authority on the other side. So for them it is extremely important that when we work with them we bring our partner who was a former chief justice of the Supreme Court, which we have in Brazil, for example. The authority is to them much more important.
Are you seeing more interest in Canada from rival firms and
clients than before, because of the oil sands?
Very much so. It’s not all energy. For us there are wonderful Canadian companies and financial institutions that are very attractive. I think our competitors see that. It’s impossible that only we see the future.