Opening an office overseas can offer a law firm numerous advantages, but such an enterprise can be fraught with difficulties. David Furst explains how quality control and planning can help minimise risks


The commercial environment in which law firms and their clients operate is becoming increasingly global day by day. The ability to service clients' needs overseas adds significant breadth to the service a firm provides and helps to build competitive advantage.



So what drives firms to have an international capability? Sometimes it is a defensive measure to protect their current market position. In other cases, the need for international capability becomes apparent when existing clients approach a firm with a particular piece of work, asking for specific advice or for the firm to recommend an associate in the country concerned.



Most major law firms now have international link-ups - and if a firm cannot help their client in a particular country, someone else will be waiting in the wings.



Even if clients do not have an immediate, specific need for overseas legal support, or if they have made their own contacts, a firm is strengthened by an international presence in case of any unexpected opportunities that arise. It allows firms to be seen as a 'one-stop shop', anticipating and meeting all their clients' needs, and is frequently an important factor in a tender process even if the client, in reality, will not make great use of overseas capabilities. It is seen as something that is there, if it is needed.



Clients may often perceive an advantage in having a UK lawyer who will liaise with an overseas lawyer, and who is able to appreciate and help resolve any cultural and procedural differences.



An international presence can increase name recognition both abroad and at home, within the profession and with clients. It will invariably help to attract new clients in the UK, particularly given the high levels of inward investment into the UK, with London firmly established as the world's leading financial centre. Inward referrals to the UK are often a major benefit of overseas connections.



Overseas expansion offers many opportunities, but how can firms undertake such expansion with minimal risk? A firm's strategy will depend on its clients, their types of business, and whether they have a presence abroad.



The first option is that of building an ad hoc series of formal or informal correspondents, or 'best friends'. They enable you to help clients with specific requests for help in a particular country. The important thing to ensure here is that firms have in-depth knowledge of the person to whom they are referring work and, more importantly, of the capabilities and limitations of that firm.



The worst possible outcome of any professional recommendation is that it goes wrong for the client. In some cases, it can go so wrong that it actually harms a firm's own relationship with its client. Therefore, it is crucial that firms have confidence in the partner they are recommending. Making what transpires to be a bad recommendation is far worse than not making a recommendation at all.



An alternative is to join an international network of independent firms with a central function, such as the employment law firm alliance Ius Laboris. Such networks usually involve a commonality of type of specialised work across different jurisdictions. Again, there should be regular contact between members, so that they all can work together with confidence and with people they genuinely know.



Opening your own offices overseas is the biggest step and can be a substantial investment. There are unlikely to be positive short-term returns, but this strategy can be extremely beneficial in the long-term.



To ensure success, careful consideration should be given to issues such as how the office is staffed (for example, by acquiring a local firm, or by relocating UK staff), cultural differences, the structural, regulatory and tax issues in the overseas location, and reward packages for the overseas partners. A fundamental decision is how integrated the overseas office should be with the main firm.



Whichever route is taken, there are risks involved, which should be considered from the outset. Quality control is vital - any unsatisfactory work done overseas endangers the client relationship. Poor co-ordination with foreign offices could be costly both financially and in terms of management time. Most importantly, the firm's existing brand must not be put at risk by any overseas operations.



It is certainly possible to mitigate these risks by planning. Depending on the method of overseas expansion chosen, various best practice guidelines may apply.



Firms must do their research. The time and expense of a visit to meet overseas partners is essential for peace of mind and the assurance of consistently high-quality work. When merging with or acquiring a foreign law firm, financial and other due diligence is obviously essential.



Those considering joining a network should investigate thoroughly beforehand, and try meeting not only those running the network, but also some of the member firms.



They should find out how restricted membership is - would they be the only UK representative, or one of a multitude? They should also ask how the vacancy in the network has arisen and whether it is because another firm has left, and, if so, why.



Whichever way a firm chooses to expand overseas, progress should be monitored on an ongoing basis. Firms need to ensure that whatever they are doing is in the client's best interests.



If the client partner is managing the relationship well, then they will take steps to ensure that whoever the adviser is abroad, someone from the UK firm who is known and trusted by the client will always be involved to circumvent potential problems and to help achieve the result the client wants.



David Furst is chairman and head of the professional practices group at accountants Horwath Clark Whitehill