The increasing flow of trade between the world’s emerging markets is creating strategic challenges for international law firms without well-developed emerging market credentials.
Major Chinese banks, now among the largest in the world, are moving aggressively to help Chinese clients expand overseas. The terms that they offer are highly competitive and their clients work in various fields, from oil companies in Angola to infrastructure projects in Latin America.
While China is a dominant force, much intra-emerging market trade is flourishing without a Chinese dimension; for example, the sale by Kuwait-based Zain of its African mobile telecommunications network to Bharti Airtel of India.
Also on the rise is foreign investment by emerging market countries into developed markets – not least, direct investment in Europe and the US. Furthermore, China’s stated intent that 50 per cent of its international trade be settled in yuan by 2015 suggests that its currency may play a far more prominent role in global finance in years to come, alongside the US dollar and the euro.
Despite globalisation and technological advances, law remains a persistently local phenomenon.
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We are not yet seeing as much international standardisation of the substantive content of law – unlike the standardisation of accountancy practices we saw prior to the formation of the global accounting giants. This means that global law firms seeking to serve the world’s foremost financial institutions and corporations need to be able to provide services seamlessly across the globe, integrating those services where they can be at the global level but also plunging deep at the local level.
We have offices in many emerging markets, but where they do not exist, we work closely with trusted local law firms. In doing so we marry deep knowledge of the local legal and business environment with the expertise of our global networks, producing work that is of similar quality to what would have been produced in a financial centre. Only then can deep, trust-based relationships with clients be sustained.
A clear distinction will emerge in time between those firms that get this right and those that value geographic spread over quality.
Simon Davies is the managing partner at Linklaters