European Trip

I got back to New York this past Memorial Day Weekend after my extended European
trip.

While the trip was even more professionally rewarding and successful than
I had hoped–not to mention fascinating and deeply gratifying on a personal
level–I owe you all, Dear Readers, an immediate and fervent apology for
appearing to have gone into radio silence for essentially the entire duration. 

In
mitigation all I can plead is that finding reliable and speedy online access
in the various venues I visited was inexcusably difficult.  Before you
think to yourself, “spoiled American!”, let me hasten to add I had no expectation
of being online whatsoever in the remote reaches of Scotland where the trip
began, all of which were reachable only through that most economical and environmentally
unintrusive means of access, the single-lane, two-way road.  Quaint and
hair-raising in equal measure.  And yes, in those remote stretches my
nonexistent expectations of online access were precisely fulfilled.

No, the surprising part was how sporadic and weak online access was even in
first-class hotels in Edinburgh, London, Vienna, and Budapest.  Unless
you’re a fan of composing thoughtful and extended essays, requiring more than
a modicum of genuine reflection, with your laptop on your knees and perched
in the midst of bustling hotel lobby bars, getting online was more challenging
than finding water in Death Valley.

That said, a brief recap of my recent travels.

Scotland

Where it all began, not just on this particular trip but figuratively and
literally for Clan MacEwen.  In the 1100’s (best guess estimate), Clan
MacEwen staked out territory on the eastern bank of Loch Fyne, southwest of
Glasgow, near what is now the tiny settlement of Kilfinan, just above Tighnabruich.  Over
the centuries, home base to the Clan became the world-famous (sorry–lost
my head) MacEwen Castle.

Calling the ancient structure, creatively embellished artists’ renderings
of which are all that remain, a “Castle” is of course one of those conceits
to which any self-respecting Scottish Clan is manifestly entitled, but let’s
not kid ourselves:  It was probably more akin to a glorified fort, although
in terms of fitness for purpose that might have been more realistically the
ticket. 

In any event, the site itself–surrounding the location of which there
is absolutely no doubt–is precisely the type of site you would pick several
hundred years ago if defensibility were your primary criterion.  Situated
atop a tall bluff dropping sheer on three sides to Loch Fyne and its beach,
only the fourth side is remotely navigable, but even it requires scrambling
up a steep and intimidating slope using tree limbs for aid and support.

Once you reach the top, all that remains of the Castle is a pile of rocks:  Literally,
a cairn with a plaque commmemorating the site.  Those of us with highly
active imaginations can pretend to discern the outlines of a large foundation,
but speculating more than that is to go beyond what even the most self-indulgent
clansman could condone. 

Aside from defensibility, the site has other fabulous attributes, from immediate
access to Loch Fyne itself, whose salmon and oysters are still identified by
name on menus of the finest restaurants throughout the UK, to woods stocked
thick with deer and rabbits to fields in cultivated use today.  The day
we got there, after a mile-and-a-half trek across fields, unbridged streams,
rocks, a stony beach, and finally a marsh in full mucky bloom, was suitably
foggy, drizzly, and exceedingly raw (we had sleet the nights before and after).

But the business reason for Scotland was to be the leader and rapporteur for
the Annual Retreat of the Centre for Professional Legal Studies of the Law
School of the University of Strathclyde. This honor I owe to
Richard Susskind, whom I have long counted a friend. 

For those of you who may not be familiar with Strathclyde, the law school
is pursing some seriously innovative initiatives in its curriculum and how
law students go about learning to become practitioners. 

The “CPLS” retreat is held at Ross
Priory on the banks of Loch Lomond.  Needless to say, this was a
very special place to hold a retreat.

London

I was last in London this past January, and I found the atmosphere palpably,
if subtly, less grim than it had been then.  (I’m speaking of law land,
you understand:  London itself is anything but “grim”!)   Primarily,
I visited with the Magic Circle and similar large firms, and there’s an emerging
sense that perhaps the worst is behind us. 

Let me immediately add that people aren’t exactly dancing jigs, and the ratio
of those saying they had their doubts about the alleged “green shoots” espied
by members of the political classes outnumbered those who endorsed the green
shoot theory by, oh, 20:1.  But when I say “the worst behind us” I think
it’s fair to report that the consensus seemed to be  that the most drastic
of cuts are now in place and future cuts will be more by way of fine-tuning
(and continuing, of course, to ratchet up performance reviews) than they will
be by way of more massive culls.

That said, the challenge in this financial-services-driven meltdown is clearly
more extreme in The City of London and here in New York than it is elsewhere
in law land.  Indeed, I note that just this morning The American
Lawyer published Citibank’s Dan DiPietro’s “First Quarter Update” which
reports that
“AmLaw 100 firms were hit harder than the broader sample [reflecting] heavy
reliance on transactional work and clients who are more heavily weighted in
financial services.”

Yet another aspect of the New York/London axis that perhaps receives undue
attention is the extent to which the UK-based firms are truly international
and US-based firms are still, on that score, largely pikers. 

This is a topic worthy of a column or two in its own right, but suffice to
say I did an analysis of the “Global 50” (courtesy of The Lawyer magazine)
and well over half of all lawyers in Magic Circle firms are based outside the
UK.  That makes them international firms by anyone’s measure.

By contrast, here are the same statistics (graph is my work) for our home-town
firms:

I know the mice type may be hard to read, but this is meant to
chart major NYC-based firms by percentage of lawyers outside the US.  The
somewhat arbitrary red line crossing the chart at the 20th percentile is mine.  I
put it there on the theory that if 4 out of 5 of your lawyers are in your home
country you cannot lay serious claim to being an “international” firm.  The
percentage is arbitrary, as I said, and highly debatable, but I thought it
worth drawing a line in the ether. 

This provokes two thoughts:

• If globalization is here to stay–which it is–how prepared are
  these firms for it?  Perhaps a better question is whether they still
  have work to do to spread their wings beyond the familiar and cozy US back
  yard.  You can, it is indeed true, serve clients internationally from
  a New York-centric base, but at some point there’s no substitute for being
  there.  (Speaking parochially, the whole point of this extended trip
  I just returned from was working with non-US clients; sometimes the best
  and only thing to do is to get on an airplane.)

  More importantly, for all of those firms substantially below the 20% line,
  what is your international strategy going forward?  If you’re
  a 55-year-old partner, that may not be a question of much moment and less urgency,
  but if you’re a partner of 35 or 40, perhaps you’re wondering.

• Recruitment issues:  About a quarter of the current Harvard Law School
  student body is not US native-born.  These students probably anticipate
  stints abroad during their careers as a matter of course.  What do you
  have to offer?

Are New York and London “existentially” threatened as centers of global finance?

Not during your career, or mine. 

Consider what they have going for them:

• A tremendous extant infrastructure not just of lawyers and investment bankers
  (remember them?–they’ll be back), but also the latent infrastructure
  of everything from accountants, graphic designers, restaurants, hotels, and
  catering services, to black cars and messengers.
• Decent places to live:  Good housing stock.
• Wonderful shopping.
• Great culture:  Museums, theater, opera, performing arts, even sports.
• And quite tolerable climates, all things considered.  (No monsoons,
  no tornados, earthquakes, wildfires, or floods, and no need to live 11 months
  of the year in hermetically sealed airconditioned bubbles.)

In short, New York and London are here to stay for the foreseeable future. 

Although if you had to choose a timezone where you could most easily do business
in the same day with Asia and North America, it would surely be London and
not New York.  Can’t have everything.

Vienna

What can you say about a City that has hosted so many profoundly important
historical events, from the 1815 Congress of Vienna to some of the most recent
UN negotiations over the fate of regions from Darfur to Bosnia?  Right
after the Second World War, of course, it was divided into four zones, one
each controlled by the US, the USSR, Great Britain, and France, making it the
hotbed for endless spy dramas, factual and fictional.

More prosaically, this trip here 20 years after the Berlin Wall fell was courtesy
of Hudson Legal, (as was the following
destination, Budapest).  I thank them effusively for their hospitality
and professionalism throughout my stay in Austria and Hungary.

The Central and Eastern European market for legal services is quite different
than the US/UK/EU–“western Europe” model, although the strategic and
economic challenges facing firms in the CEE region are fundamentally identical
to those facing firms oriented more towards New York and London.  Just
for the record, those challenges include recruitment and retention of talent,
equitable and motivating partner compensation, winning the competition for
premium client work, and managing geographic growth.

Speaking of geography, there is no substitute for a the wealth of information
contained in a map.  So forthwith to just that:

I’ve drawn red boxes around the pertinent country capitals. 

After you’ve given yourself a moment to get oriented, here’s the next most
important thing you need to know about these markets:  They are each very
small.  Populations (courtesy of the CIA):

• Austria:  8,205,000 (cf.New Jersey, 8,682,000)
• Hungary:  9,931,000 (cf. Georgia, 9,586,000)
• Romania:  22,247,000 (cf. Texas, 24,327,000)
• Poland:  38,501,000 (cf California, 36,757,000)
• Czech Republic:  10,221,000 (cf. Michigan, 10,003,000)

Also compare:

• UK:  60,944,000
• France:  61,538,000
• Germany:  82,370,000
• Italy:  58,146,000
• US:  304,075,000

This of course has tremendous implications for law firm strategy.  Indeed,
according to the people I got to know in the region, many US and UK-based firms
are pulling out of the CEE markets, leaving the premium work to locally-based
firms such as Wolf Theiss.  Using
that firm as an example, while they have 12 offices to cover the region (ranging
from the Ukraine in the east to Albania in the south, and the Czech Republic
in the north and west, with headquarters in Vienna), it’s also the case that
every office is reachable easily within a day.  And you can make a virtue
of necessity, as Wolf Theiss does:  Over 80% of its work is cross-border.  Now
that’s an “international” law firm for you.

Vienna Staatsoper (State Opera)

Budapest

Hungary is perhaps most famous among former Warsaw Pact members
for being restive under the yoke of Russia.  Not only was there the famous
1956 uprising, quickly put down by the Red Army at the cost of some 22,000
Hungarian lives, but starting in the 1960’s and running through until 1989
and the fall of the Wall was “goulash Communism,” a far more free-market oriented
strain of government more attuned to civil rights and providing actual latitude
for dissent (within bounds, to be sure).  It even permitted a limited
number of small businesses to operate freely in the service sector and, mirabile
dictu, unlike other Communist bloc countries in the 1960’s and 1970’s,
groceries were sufficiently plentiful as to obviate lines.

Budapest itself is, historically, two cities:  Buda on the
western side of the Danube and Pest on the eastern side.  The cities were
not united by a bridge until 1849 when the famous Szechenyi Chain Bridge opened,
designed by English engineer William Tierney Clark after his earlier Marlow
Bridge crossing the Thames in Marlow, England.  On-site construction was
supervised by the Scottish engineer Adam Clark (no relation to William) and
in his honor the Buda terminus of the bridge now empties into Adam Clark Square. 

Before
arriving, I was soundly skeptical that there would be any actual difference
between the “two” cities, but there is indeed.  Geographically,
Pest is as flat as Iowa, while Buda consists largely of the quite steep Castle
Hill (with Buda Castle at the top).   Buda also tends to have a concentration
of religious, historic, and ceremonial buildings, while Pest is where commerce
and business actually get done.

As the capital of Hungary, Budapest features the national Parliament,
which is the largest building in Hungary and, not unlike Westminster, is in
Gothic Revival style.

Hungarian Parliament (Danube-facing side)