Hugh Verrier is chairman of White & Case, a global firm with over 2,000 lawyers in 26 countries and 38 offices, generating an annual revenue of US$1.3 billion. In a wide-ranging interview with the award-winning former CNN news anchor, Todd Benjamin, he analysed the financial crisis, emerging markets and the current challenges for the globalised legal profession.
Todd Benjamin: I want to begin with where we’re at right now, because we’re in a very fluid situation in terms of the global economy. You have a lot of Fortune 500 clients; you represent about half of the Fortune 500, you represent two-thirds of the Fortune 100. What’s your sense among your clients in terms of the possibility of a double dip recession, their nervousness?
Hugh Verrier: Well, if there’s a double dip, I missed the upward part of the W. I think there’s general nervousness and concern; we’re in year four of a protracted recession and it’s going to be a long climb back to a vibrant economy in which transactions will prosper.
TB: In fact, some academics think it could be up to ten years before we see recovery in employment, housing and so on and so forth, as the deleveraging continues.
HV: I think these are complex, chaotic times and leadership becomes all the more confused and it’s a natural criticism. But, in fairness, we all need to find and… try to find our ways as leaders in difficult times.
HV: Yes, I mean, there’s a business cycle that we know and we live through many generations of that cycle in the course of a career. This is one. It’s a long one. It has its unique features.
TB: You, of course, are in a leadership position, as are many of the CEOs that you represent, and it seems to me one of the real problems right now is there is a crisis of leadership on both sides of the Atlantic. You saw it, you know, this summer with a standoff in the US over the debt crisis and the continuing acrimonious relations on Capitol Hill. You see it in Europe, where there’s a lack of confidence among European leaders to solve the eurozone crisis. Would you agree with that analysis, or do you think it goes deeper?
TB: Do you think leading a law firm is different than, let’s say, leading a company, or do you think many of the same principles apply?
HV: I think the principle of inspiring and empowering others within the organisation is universal. I think partnership has its own unique qualities where they are fellow owners of the business and not … directed by a managing partner or chairman. And that requires its own set of skills that’s unique to law firms and the partnership model.
TB: You became chairman of White & Case in 2007 and then, all of a sudden, you found yourself in a hugely challenging situation, of course, a financial crisis, which really started to build strongly in the second half of 2007 and then the rug was pulled under completely in 2008; obviously, a hugely challenging time. What did you learn from that experience?
HV: I think I had learned the lessons when I was in Russia in 1998, where the collapse was far more severe than what we saw in 2007 and 2008, which is the need to protect our people, to focus on the basics, to do what we can, to have the confidence that we would get through the difficulties, that they were part of a normal business cycle and not to let the sense of collapse lose our sight or lose morale. I think those were the most important take aways from that experience, both in Russia and again globally in 2007 and 2008.
TB: Nevertheless, you did bring in an outside adviser; you brought in McKinsey to advise you how to restructure. Why did you bring in someone from the outside? Was it a lack of confidence on your part? Was it a way of rationalising what you needed to do? Because it was quite painful, actually; you laid off 10–15 per cent of your workforce, partners were cut – a very acrimonious and difficult time.
‘‘If there’s a double dip, I missed the upward part of the W. I think there’s general nervousness and concern; we’re in year four of a protracted recession and it’s going to be a long climb back to a vibrant economy.'
HV: A few things on that. First, I’d love to blame McKinsey for cuts, but they had nothing to do with them. We had been on a journey to get… to become increasingly global and globally integrated as a firm. We began that journey over the course of many decades, establishing offices with their own life, their own P and L, and what we came to see as the firm grew so much as it did in the last decade was that we needed to find a way to integrate those offices to work together to deliver client services. That really was what we observed that our clients expect: cross-border work, globally oriented service. So, I believed in coming into the chairmanship that we needed to reorganise our firm to create those synergies and commonalities that we didn’t have in an office-centric type of environment.
Now, when we re-engineer an organisation… a multi-billion dollar organisation, I think it would be an act of hubris to believe that we could reorganise it without counsel and without a reference to the external market. And, so, we took the vision we had as to how we wanted to create a more regional structure to bring together the parts in more manageable units, but we thought that McKinsey could look at it and might have some thoughts that we could benefit from. And I’m not too proud to accept help and guidance from anyone, including McKinsey, and their work therefore helped us as thought partners working through the reorganisation that we created. And they helped us adjust it in ways that I think added value to us.
TB: Is it a work in progress still?
HV: The reorganisation has been successful; it’s taken well. We believe it’s delivering on the promises that we wanted to address. It’s always a work in progress, but we feel that the reorganisation is complete and now the task is to use that reorganisation to achieve strategic goals.
TB: Now, the result of the restructuring was 16 global practice groups, obviously reflecting a globalised marketplace.
HV: Right, indeed. I mean, there were many components of it. We created global practices reflecting the cross-border work; the need for practices to straddle individual markets in ways that reflect that goal that we wanted to achieve and to connect lawyers who had never been fully connected. So, for example, white collar [government investigations and enforcement matters]… we have a global white collar practice, but it was only when we really established it as global practice, identified it as such, and brought the lawyers together who practise all around the world with their individual strengths… And that became a very empowering experience for the practice on a human level and on a professional level and in terms of the client service we’re able to provide.
TB: For other firms and lawyers who may be listening to this, what did you learn from this experience that you could bring to them – and I realise every office is unique – in terms of when you undertake a restructuring, what’s most important?
HV: The reorganisation – I call it a reorganisation rather than a restructuring – but organisational design in a law firm is extremely difficult for a host of reasons, but above all was the willpower of the partners to implement the change. That willpower came in part from the economic uncertainties and pressures that we felt at the time. So, we thought ‘the economy’s going in a southward direction, but how do we pull ourselves together to work through that?’ And our partners came together with really a high degree of unanimity.
So, I think the… again, back to your question of the partnership model, building the consensus among the partners, having a clear sense of what we want to achieve, I think those were the principal take aways. But in law firms, of course, there’s always sensitivity about titles and about how in the course of reorganisation individuals may be affected. So, there needs to be the overriding sense of purpose for a reorganisation to be effective.
TB: You said in 2008, you know, quote, ‘the day of the brick and mortar approach to building a global law firm is over.’ What did you mean by that?
HV: Take India, for example. We had an office in India for a time and now international law firms are not able to have offices. And then the question is, well, does that mean we’re excluded from the market or we’re able to function within the market? And we had lots of lawyers around the world who have different interests in India or act for Indian clients outside of India. So, we thought, how can we corral and channel those… that expertise and knowledge in a way to benefit our clients?
So, we came up with the idea of a virtual practice, which is that we don’t have to have an office somewhere. And, in many ways, having a group of partners around the world who come together to focus on India can be very empowering for those partners, whereas, if you have an office in a place it may be a little bit of a tendency to… well, the guys on the ground are dealing with India.
So, it created synergies that were powerful and important. And we’ve replicated this in a number of countries where we don’t have offices, where we have active practices, either in or to do with a country.
TB: Are clients’ demands different in a globalised marketplace?
HV: They demand above all consistency of quality. So, I think that’s certainly one unique feature. I would say in the past, clients would go to an individual market and they would satisfy themselves with the level of skill in that market. That’s no longer the case now; the work that we do, wherever it may be, has repercussions within the client throughout the globe. So, therefore, again, back to aligning the firm with global clients, this is a unique challenge to our time.
TB: You were talking about India just a moment ago and… you know, why the ties with Jindal Global University in India? What does that bring you and what could that bring you in the future?
HV: Well, I think the role of the global law firm in supporting legal education and supporting the creation of the finest international lawyers in the world is at the core of the mission of a global firm. Jindal offers that opportunity; a highly unusual university, very much a private model, which offers some alternatives to the traditional law schools in India, with a very international focus, I might say. So, we hope that by supporting that school we will be helping to develop international lawyers for India and for the rest of the world. We have agreed to internships of Jindal graduates to work with our firm and visiting teaching arrangements, scholarship and other sorts of support for the university.
TB: Of course, India’s been a very challenging market for anyone who wants to get any foreign firm. What opportunities do you see for firms in the coming years in India?
HV: This is one of the major economies of the world and as their corporates grow larger and stronger and they have global ambitions, they will reach out for services in other countries, which global law firms like ourselves are well-situated to support. So, for us, the attraction of the India market is the outbound work of major Indian corporates as they find their place in a global economy.
TB: Should Western firms be allowed to open up in India?
HV: We can operate in India or outside India, as I described. We believe, though, that India would be best served by being open to international or other law firms.
TB: Is that slow process of liberalisation, be it India or in some other markets… it has to be a source of frustration for you. Because, you know, as a chairman – of course, you meet with government officials – you were somewhat diplomatic in your response to me just a moment ago, so you can operate within or without, but it would be your preference to be able to operate within. How are you trying to work with various government entities to realise that your presence there would not be threat? Or, in fact, is it a threat, be it India or elsewhere?
HV: Well, yes, take another example; take South Korea. South Korea has for many years indicated that international law firms would be able to establish themselves and recently have entered into arrangements with UK-based firms by virtue of a treaty with the EU that allows UK firms to enter that market ahead of, for example, what they consider to be US-based firms. We can disagree what’s a UK and a US-based firm today, but certainly letting some in and not others may be one of the most awkward or frustrating, to use your word, experiences.
But to come to your question, what I’ve done several times is I visit Korea, I visit the head of the bar, I visit our clients, and we make the case for the constructive role that we’re able to play in that country, including, in addition to representing Korean clients as they globalise and therefore strengthening the role of Korean corporates within the global economy, but also offering opportunities to young Korean lawyers.
‘‘I think I had learned the lessons when I was in Russia in 1998, where the collapse was far more severe than what we saw in 2007 and 2008, which is the need to protect our people, to focus on the basics, to do what we can, to have the confidence that we would get through the difficulties.'
Young Korean lawyers are desperate, as we see with young lawyers all around the world, to be part of something larger, to have opportunities beyond the confines of their own country. And why shouldn’t they? Why shouldn’t they occupy leadership roles in all aspects of the profession beyond their own country?
So, opening the doors to the participation of firms outside a host country has corresponding benefits that I think are important. Of course, the decision has to be taken in its way, in its own time that’s appropriate for that country’s development. As I say, we will be successful in Korea with or without an office. And it’s not the presence of the brick and mortar in Korea that determines our success.
TB: Where do you see the greatest potential in markets that you’re not in right now, that you would like to be in, or that you may be going in, let’s say within the next five years?
HV: South Korea is an important market and I think that would be at the top of the list or one in the top of the list. Indonesia is also a very important market where we’ve been active historically and I could foresee our being involved again on the ground in Indonesia.
Australia is going through a real transformation below the surface right now, as Australian firms look at arrangements of one type or another with other firms around the world. So, I could quite well anticipate a breaking in that market where international law firms, including our own, physically become either present or develop very strong links.
A similar journey seems to be going on in Canada as another market which traditionally felt, where I’m from… where it’s traditionally felt itself closed to international law firms, now all of a sudden looks at the world from a different point of view of concern as to whether or not international mergers would be an appropriate path. So, that too may be a market that breaks open in the next few years.
TB: Of course, White & Case opened its first office outside the US in 1926 in Paris. And, of course, it was accelerated by the fall of the Berlin Wall; that opened up a lot of opportunities in Eastern Europe and so forth. And now, of course, we have a lot more globalisation: you know, China is very strong, a lot of different places in Asia, Brazil, other places in Latin America; a lot of opportunities.
It’s interesting that the majority of your partnership is outside the US. That really has been by design – or is that a result of globalisation, or a combination of both? Because I know that you are a very, very strong believer in international experience.
HV: Yes, our global model is based on pursuing opportunity with global clients, or clients who want to be global. And an element of that as well is having the leading lawyers in the important markets where we choose to operate. That leads to a growth outside of the United States.
We do not believe that we can be a global firm with 80 per cent of our lawyers based in the United States. So, our model is based on being where our clients want us to be and being the finest lawyers in those markets, but not in a disenfranchised or disconnected or federation, but rather in an integrated way.