Regionalization: ¿Strategic or Opportunistic?
The Latinamerican legal market was recently surprised by the news about the merge between “Philippi, Yrarrázaval, Pulido & Brunner”, a Chilean firm, and “prietocarrizosa”, a Colombian firm, which includes a 30% participation of “Uría Menéndez” from Spain in the Latinamerican firm and a 3% the other way round. Partners across the region are trying to figure out what this piece of news means for the future of their business, hoping that it won´t mean much but suspecting otherwise. So the question is ¿does this mean that the Latam legal market will change significantly in the next decade and this is just the beggining, or we are looking at a particular case that will not reproduce further?
In the Fall 2014 issue of the MIT Sloan Management Review, I found an interesting article (“The Opportunity Paradox”, Christopher B. Bingham, Nathan R. Furr and Kathleen M. Eisenhardt) that identifies two ways to approach business opportunities: opportunistic and strategic. The opportunistic approach is more flexible and emergent; it follows instincts and works like cherry-picking low-hanging fruit and taking advantage of narrow windows of opportunity before those windows close or other competitors take them. It looks like the way lawyers take decisions. Strategists are more disciplined and focused. They don´t take the first opportunity that shows up or run desperately for an easy solution. Instead, they study the market they need to work on and develop a strategy to take the best available opportunities. This approach sometimes lack flexibility and can be slow. Both approaches may be good or bad, depending on the circumstances.
In a conversation with Juan Francisco Gutierrez from Philippi and Martín Carrizosa from prietocarrizosa, I identified three important aspects that were relevant in their merge process: (1) Vision and Strategy; (2) Culture and Leadership; and (3) Systems and Incentives.
(1) Vision and Strategy. You need to have a clear view of what strategic objetive the merge seeks to accomplish for all firms involved. ¿Is your vision to become a prime player in the regional market or is it a defensive move against threats towards your clients? ¿What advantage will your clients receive from the new organization? ¿Is it a better project for your professionals and why? It is evident that the Latam economic market is changing and that clients will require more sophisticated services but, how will a regional integration address the particular issues of your current and potential clients? In other words, how will you make a difference?
(2) Culture and Leadership. Is not enough to have a good strategic idea. You need to pull all your organization behind the new project, but your culture may not be aligned with it. So you need to use all your leadership skills and capabilities to convey a strong message that will seduce people enough to change some existing habits and mindframes towards a regional perspective. The new vision should work as a powerful idea to engage people and allow changes that otherwise would not occur.
(3) Systems and incentives. But off course, you need to have adequate incentives in place. The compensation structure and other career and motivational tools and criteria should help to align culture and strategy, and enhance the objectives to be pursued. If your motivational structure is disaligned with the general project it will be very difficult to get people on board.
From the issues briefly described above, it becomes clear that any regional strategy should not be pursued with an opportunistic approach. And this becomes relevant considering how difficult it is for lawyers to structure their decisions and actions in a strategic fashion, al least in the Latam markets. One reason is that the very nature of the law firm business calls for an unstructured and flexible type of operation. Lawyers are autonomous and don´t like too many plans and controls. They like to chase after clients and serve them well. Since many –probably most- law firms in the region have not yet become institutional, this individual trait is still quite strong.
The other related aspect is the timeframe. Not only will an analysis and implementation of a regional project require significant time –depending certainly on the previous knowledge of the participants-, but any significant result should also take time. Only a medium and long-term approach to the expected results will provide sufficient meaning and discipline to such an investment-demanding venture. Expectations of short-term results are likely to produce tension and frustrations.
It is hard yet to anticipate how the regional trends will affect the Latam market, but if other more developed markets may provide some indication, it is likely that this recent news will not be the last in that direction. However, law firms should refrain from jumping too soon into regional integration projects that require a good deal of resourses and energy without making an adequate strategic analysis. A combination of fear and enthusiasm may drag you towards an exciting regional venture, but if you don´t have a good business case and the necessary resourses, it may all end in an expensive failure.The Latinamerican legal market was recently surprised by the news about the merge between “Philippi, Yrarrázaval, Pulido & Brunner”, a Chilean firm, and “prietocarrizosa”, a Colombian firm, which includes a 30% participation of “Uría Menéndez” from Spain in the Latinamerican firm and a 3% the other way round. Partners across the region are trying to figure out what this piece of news means for the future of their business, hoping that it won´t mean much but suspecting otherwise. So the question is ¿does this mean that the Latam legal market will change significantly in the next decade and this is just the beggining, or we are looking at a particular case that will not reproduce further?
In the Fall 2014 issue of the MIT Sloan Management Review, I found an interesting article (“The Opportunity Paradox”, Christopher B. Bingham, Nathan R. Furr and Kathleen M. Eisenhardt) that identifies two ways to approach business opportunities: opportunistic and strategic. The opportunistic approach is more flexible and emergent; it follows instincts and works like cherry-picking low-hanging fruit and taking advantage of narrow windows of opportunity before those windows close or other competitors take them. It looks like the way lawyers take decisions. Strategists are more disciplined and focused. They don´t take the first opportunity that shows up or run desperately for an easy solution. Instead, they study the market they need to work on and develop a strategy to take the best available opportunities. This approach sometimes lack flexibility and can be slow. Both approaches may be good or bad, depending on the circumstances.
In a conversation with Juan Francisco Gutierrez from Philippi and Martín Carrizosa from prietocarrizosa, I identified three important aspects that were relevant in their merge process: (1) Vision and Strategy; (2) Culture and Leadership; and (3) Systems and Incentives.
(1) Vision and Strategy. You need to have a clear view of what strategic objetive the merge seeks to accomplish for all firms involved. ¿Is your vision to become a prime player in the regional market or is it a defensive move against threats towards your clients? ¿What advantage will your clients receive from the new organization? ¿Is it a better project for your professionals and why? It is evident that the Latam economic market is changing and that clients will require more sophisticated services but, how will a regional integration address the particular issues of your current and potential clients? In other words, how will you make a difference?
(2) Culture and Leadership. Is not enough to have a good strategic idea. You need to pull all your organization behind the new project, but your culture may not be aligned with it. So you need to use all your leadership skills and capabilities to convey a strong message that will seduce people enough to change some existing habits and mindframes towards a regional perspective. The new vision should work as a powerful idea to engage people and allow changes that otherwise would not occur.
(3) Systems and incentives. But off course, you need to have adequate incentives in place. The compensation structure and other career and motivational tools and criteria should help to align culture and strategy, and enhance the objectives to be pursued. If your motivational structure is disaligned with the general project it will be very difficult to get people on board.
From the issues briefly described above, it becomes clear that any regional strategy should not be pursued with an opportunistic approach. And this becomes relevant considering how difficult it is for lawyers to structure their decisions and actions in a strategic fashion, al least in the Latam markets. One reason is that the very nature of the law firm business calls for an unstructured and flexible type of operation. Lawyers are autonomous and don´t like too many plans and controls. They like to chase after clients and serve them well. Since many –probably most- law firms in the region have not yet become institutional, this individual trait is still quite strong.
The other related aspect is the timeframe. Not only will an analysis and implementation of a regional project require significant time –depending certainly on the previous knowledge of the participants-, but any significant result should also take time. Only a medium and long-term approach to the expected results will provide sufficient meaning and discipline to such an investment-demanding venture. Expectations of short-term results are likely to produce tension and frustrations.
It is hard yet to anticipate how the regional trends will affect the Latam market, but if other more developed markets may provide some indication, it is likely that this recent news will not be the last in that direction. However, law firms should refrain from jumping too soon into regional integration projects that require a good deal of resourses and energy without making an adequate strategic analysis. A combination of fear and enthusiasm may drag you towards an exciting regional venture, but if you don´t have a good business case and the necessary resourses, it may all end in an expensive failure.The Latinamerican legal market was recently surprised by the news about the merge between “Philippi, Yrarrázaval, Pulido & Brunner”, a Chilean firm, and “prietocarrizosa”, a Colombian firm, which includes a 30% participation of “Uría Menéndez” from Spain in the Latinamerican firm and a 3% the other way round. Partners across the region are trying to figure out what this piece of news means for the future of their business, hoping that it won´t mean much but suspecting otherwise. So the question is ¿does this mean that the Latam legal market will change significantly in the next decade and this is just the beggining, or we are looking at a particular case that will not reproduce further?
In the Fall 2014 issue of the MIT Sloan Management Review, I found an interesting article (“The Opportunity Paradox”, Christopher B. Bingham, Nathan R. Furr and Kathleen M. Eisenhardt) that identifies two ways to approach business opportunities: opportunistic and strategic. The opportunistic approach is more flexible and emergent; it follows instincts and works like cherry-picking low-hanging fruit and taking advantage of narrow windows of opportunity before those windows close or other competitors take them. It looks like the way lawyers take decisions. Strategists are more disciplined and focused. They don´t take the first opportunity that shows up or run desperately for an easy solution. Instead, they study the market they need to work on and develop a strategy to take the best available opportunities. This approach sometimes lack flexibility and can be slow. Both approaches may be good or bad, depending on the circumstances.
In a conversation with Juan Francisco Gutierrez from Philippi and Martín Carrizosa from prietocarrizosa, I identified three important aspects that were relevant in their merge process: (1) Vision and Strategy; (2) Culture and Leadership; and (3) Systems and Incentives.
(1) Vision and Strategy. You need to have a clear view of what strategic objetive the merge seeks to accomplish for all firms involved. ¿Is your vision to become a prime player in the regional market or is it a defensive move against threats towards your clients? ¿What advantage will your clients receive from the new organization? ¿Is it a better project for your professionals and why? It is evident that the Latam economic market is changing and that clients will require more sophisticated services but, how will a regional integration address the particular issues of your current and potential clients? In other words, how will you make a difference?
(2) Culture and Leadership. Is not enough to have a good strategic idea. You need to pull all your organization behind the new project, but your culture may not be aligned with it. So you need to use all your leadership skills and capabilities to convey a strong message that will seduce people enough to change some existing habits and mindframes towards a regional perspective. The new vision should work as a powerful idea to engage people and allow changes that otherwise would not occur.
(3) Systems and incentives. But off course, you need to have adequate incentives in place. The compensation structure and other career and motivational tools and criteria should help to align culture and strategy, and enhance the objectives to be pursued. If your motivational structure is disaligned with the general project it will be very difficult to get people on board.
From the issues briefly described above, it becomes clear that any regional strategy should not be pursued with an opportunistic approach. And this becomes relevant considering how difficult it is for lawyers to structure their decisions and actions in a strategic fashion, al least in the Latam markets. One reason is that the very nature of the law firm business calls for an unstructured and flexible type of operation. Lawyers are autonomous and don´t like too many plans and controls. They like to chase after clients and serve them well. Since many –probably most- law firms in the region have not yet become institutional, this individual trait is still quite strong.
The other related aspect is the timeframe. Not only will an analysis and implementation of a regional project require significant time –depending certainly on the previous knowledge of the participants-, but any significant result should also take time. Only a medium and long-term approach to the expected results will provide sufficient meaning and discipline to such an investment-demanding venture. Expectations of short-term results are likely to produce tension and frustrations.
It is hard yet to anticipate how the regional trends will affect the Latam market, but if other more developed markets may provide some indication, it is likely that this recent news will not be the last in that direction. However, law firms should refrain from jumping too soon into regional integration projects that require a good deal of resourses and energy without making an adequate strategic analysis. A combination of fear and enthusiasm may drag you towards an exciting regional venture, but if you don´t have a good business case and the necessary resourses, it may all end in an expensive failure.