For lawyers who wonder where growth in demand for legal services could come from, the following numbers are instructive. According to the Financial Times, emerging markets M&A volume was up in 2010 by more than two-thirds to date at $575.7bn, while European volume has increased by barely a fifth to $550.2bn. Deals by companies in emerging markets now account for 30% of global M&A activity, while Europe’s share has fallen to 29% – the lowest for 12 years.

Moscow, Beijing, Rio, Mumbai and New Delhi are becoming megacities, fuelling a potentially huge demand for legal services in those economies by 2030. This is a phenomenon that has not escaped the attention of Law Society chief executive Des Hudson.

International marketHudson puts the case for all firms to take the opportunities they find: ‘Not only are emerging economies growing, so are many of their populations. That trend towards mass urbanisation is likely to be replicated the world over. What that means for the legal sector, and what these megacities will need by way of services, is a central talking point.’

Hudson refers to a recent Law Society conference – International Marketplace III – which was dedicated to helping firms plan for that future: ‘2030 might seem like a long way off, but legal practices need to start thinking now about what the future holds, so they can be well placed to absorb the opportunities that come with the shifting economic gravity. The Society will do all it can to support its members in the brave new world.’

The event was a clarion call for those who ‘want to be prepared for a very different world to what has gone before’. Hudson’s view is echoed by the Society’s head of international, Alison Hook. Hook’s team works both with firms that have good prospects for growing their business through international links, and in partnership with UK Trade and Investment (UKTI) to identify fresh business opportunities.

For example, the Society’s work with law firms without a network of foreign offices provides firms with contacts and marketing opportunities, giving them a much stronger chance of convincing their clients that they are able to grow with them internationally.

‘We try and help them to avoid the pitfalls and stay real,’ she explains. ‘It’s very easy for people to get transfixed by what is written in the media about emerging markets, but the most sustainable approach is to grow out through deeper exploitation of existing relationships and capacities. Not every law firm can make headway in China, India or Brazil.’

Sustainable practiceAnother body with cross-border advice to offer is the International Bar Association. Deputy executive director Tim Hughes explains that the association offers a ‘fantastic opportunity to meet similar-sized firms from other jurisdictions who also have clients trading across borders’.

Allen & Overy’s Stephen Denyer, vice-chair of the IBA’s law firm management committee, says it is the sharing of experiences that matters: ‘In my own committee, there is no challenge that some of our members haven’t already faced and can advise about, [and] many of those members are from smaller firms, or are sole practitioners.’

Denyer highlights work done on law firm governance guidelines: ‘We previously spent a number of IBA conference sessions on issues ranging from starting a new law firm, to re-inventing an established law firm, to identifying governance structures to make practice more sustainable.’

Denyer stresses that the vast majority of IBA members only have an office in one country, as do most UK firms, so while global firms like A&O go to these events, so do smaller practices.

Peters & Peters, a specialist white-collar fraud and crime firm, has benefited from the work carried out by the IBA and has contributed to it, according to partner Michael O’Kane. He says: ‘Peters & Peters created the business crime component of the IBA and has been a keen supporter of the international efforts of the IBA, the Law Society and UKTI.’

Hughes says firms in other jurisdictions come to the IBA to build relationships with British firms, ‘so by maintaining your own involvement at the IBA they might find you’. This requires commitment, as Denyer explains, given the size of the IBA, but he firmly believes that being present at events on a regular basis benefits firms over time, as conversations and networking assist business development.

Hughes adds: ‘Partners in all firms are looking for the right contacts in the right cities – people they can trust to look after their clients’ work in that jurisdiction, and who have appropriate scale and cost for the piece of business in question.’

Bilateral relationshipsThe Law Society has made regular use of UKTI support, and used its own presence at the IBA annual conference in Madrid, and recently in Vancouver, to support smaller firms.

In challenging economic times, Hook also points out: ‘We can bring people into the country to see our firms, so that it isn’t a matter of a law firm thinking, "I have to go out and impress clients in Mexico, India, China," or wherever.’

She is realistic that ‘this kind of marketing spend – and not just for one trip but for the many visits needed to generate any return – is very difficult to get partner backing for, so you really have to plan, and have a plan that people buy in to,’ she adds. ‘It’s easier to do that if you have met more people from your target jurisdiction and are more familiar with the sort of possibilities that are out there’.

The Society has focused on bringing in groups of lawyers from other jurisdictions, including emerging markets, and organising opportunities for discussion and bilateral meetings. A corollary of this is that law firms can talk to their foreign counterparts to see if there is any scope for working together, which Hook says has been very fruitful.

She recalls: ‘Last year, we had a group from Nigeria focusing on shipping, banking, and oil and gas; we had 20 law firms from numerous cities around China in March; we had 15 law firms from India in May; and we had Latin American firms in July. A group came in from South Africa in November. All this, in addition to mixed accountancy/legal groups from Germany and Italy. Next year, we’ll be looking to add groups from Korea and Turkey.’

The efforts of the International Division have won plaudits. Stephen Houston, head of corporate at DWF, describes the division as ‘very knowledgeable. It spends time in the jurisdictions covered and is well connected’. Simon Hodson, Beachcroft’s managing partner, agrees: ‘Participation in networks and associations like this and the IBA generates opportunities and provides assistance for the benefit of all.’

Peter Jackson of Hill Dickinson praises the Society’s advice: ‘As a first due diligence step, we approached the Law Society to advise us. It was a good move from the regulatory side, because the Society helped us out by inviting us to receptions, made introductions, and generally pointed us in the right direction. It was useful for somebody to be giving us a helping hand.’

Referral networksLaw firms can also seek work through referral networks, including the likes of Lex Mundi, Meritas and TerraLex. In addition to opening up a steady stream of referrals, they also act as a gateway to emerging markets, shared resources, combined marketing and client references. Many UK firms belong to such alliances, such as Ward Hadaway, Howard Kennedy and others.

Lindsay Griffiths, director of network development at cross-border association the International Lawyers Network, says she has noticed an increase in referral activity. She also highlights another ‘r’ word – relationships. ‘ILN members have developed strong personal and professional relationships through our conferences and meetings, through speciality groups and other cooperative efforts, which are the hallmark of our network,’ Griffiths says.

Such networks, though, are not for everyone. O’Kane says that the absence of an affiliate firm presents no bar at all to accessing good advice in another jurisdiction. Clients, he says, often welcome ‘the flexibility that comes with not being contractually connected to a firm that we are bound to instruct, thereby allowing us to tailor the choice of firm to the needs of the clients’.

Ivan Gordienko, a lawyer at Anglo-Scottish firm McGrigors, agrees: ‘McGrigors is not a member of the IBA as our own network of clients and contacts has always proven more than sufficient. This position also allows us to retain absolute independence and objectivity.’

Instead (for example) the firm maintains a Russian-Ukrainian desk of dual-qualified lawyers and a wide but informal network of regional contacts. ‘This means that tensions and costs associated with formal associations are sidestepped. It also allows us to choose the best providers, on an objective basis, to meet clients’ needs.’

Jacquetta Castle, of insurance law firm Robin Simons, says her firm’s involvement with emerging markets tends to be through reinsurance and umbrella policies that are placed in the London, American or European markets.

She says: ‘We can draw on connections that we have built up over the years, which is often more flexible than being tied to a network that may not have expertise in the specific area of law we want. For us it’s not worth trying to break into local markets; it’s more the coverage of international risks that concerns us.’

Of course, in making referrals, firms expect a referral in return. A recent survey by Martindale-Hubbell suggested that western European firms have the highest expectation of a reciprocal referral – 36% expected something back from a referral partner, although just under 40% of all firms placed only some, rather than exclusive, importance on this factor.

Client wants, client getsOf course, taking heed of the client is one major spur to considering emerging markets. Peter Jackson, Hill Dickinson’s managing partner, developed the firm’s global links around his firm’s focus on the shipping sector. The firm decided to open offices in both Singapore and Piraeus, to service client needs and assist the London shipping practice.

‘We’ve always taken the point of view that geographical demands are driven by client needs, not just that it would be nice to have an office here or there,’ Jackson explains. ‘Singapore is one example. Two separate insurer clients had come to us and said that we didn’t have the geographical reach that they needed. They were having to use other firms so we were effectively losing out on work.’

Jackson explains that, in opening an office, much depends on the jurisdiction itself. ‘Although we have no plans to open an office in the BRIC [Brazil, Russia, India and China] countries, we had looked at China, which is becoming a phenomenal player in global markets, and we might look at having a presence of some description there in time.’

India, he observes, is ‘very difficult’ from a regulatory point of view, a feature shared by many other emerging market jurisdictions.

Firms should heed the advice of those that have gone before them, too. Watson Burton’s David Jones, a former Masons partner, who helped set up his old firm’s Hong Kong office, dwells on the pitfalls: ‘Firms have gone increasingly global, opening up offices as part of trying to build up their international client base, but some law firms can’t afford to open abroad. It’s seriously expensive to do it – you can spend hundreds of thousands of pounds, and dealing with the regulatory side is often very difficult. Even buying an existing office requires a lot of effort.’

Associations, he says, are the next best thing, but even they can be problematic ‘because you can never be sure what you are going to get out of it’. Some can be a one-way street, where you refer work ‘and get nothing in return’. Still, Jones concludes: ‘There’s no doubt that there are some markets, if you’re rich enough, which are potentially rewarding. You’ve got to be bold, and be prepared to follow it through with long-term planning and a proper network.’

A major disadvantage of being part of a network is the potential for conflicts. And Jones warns: ‘You’ve got this group of members, some of whom are not very good, and it can backfire if you refer work. It is swings and roundabouts, and quality is always an issue.’ Perhaps the key lesson is the importance of remaining nimble. Paradoxically, it can be said that this is precisely what these networks and associations offer firms – the ability to react quickly to client needs, without having to commit fully to one jurisdiction, and to proceed at the pace that suits members.

Ben Rigby and Anastasia Hancock are freelance journalists