Editor: To provide a starting point for our discussion, how would you define your original mandate when you first became regional managing partner in late 2005?
Medwick: By the time my first term started, the changes resulting from the merger of our three combined firms (legacy Clifford Chance, Rogers & Wells in the U.S. and Punder Volhard in Germany) had largely been implemented, and we were operating as an integrated global law firm. Looking back, there was no blueprint in the legal industry for such an ambitious international merger – it had never before been attempted on that scale – and as you would have expected, there were bumps in the road early on. Still, we had made steady progress, and we were moving forward aggressively.
My goal was to grow our firm in the Americas by developing deeper relationships and increasing our market share with leading global corporate and financial institutions. Markets were favorable, and we were on the right track. We had assembled strong teams and were performing well in several strategic areas; then, in September 2008, as we all know too well, the world suddenly changed. Many clients found themselves in difficult positions that required new ideas and different approaches. It didn’t take long for us to understand that if our clients were facing changes, we should change as well, so we began to carefully think through how we would transform our U.S. firm for the world that lay ahead and then focused our decisions around that. What has resulted from the effort – and I certainly didn’t do it alone – is my proudest accomplishment as regional managing partner. Today, I almost look at our firm in the Americas as “Version 2.0.” We’ve never been stronger overall, and there’s no question we’ve built the right platform for Clifford Chance to continue growing in this region as the leading international law firm in the Americas.
Editor: When that sudden erosion of the U.S. financial market took place late in your first term, did you find your leadership priorities changing at that point?
Medwick: Yes and no. What did not change was our client-first mindset. If anything, that focus only intensified – especially with multinational clients – because of the unique and critical challenges presented and the tremendous changes brought about by the credit crisis and subsequent Great Recession. Clients asked for our assistance with navigating through issues relating to regulatory matters, investigations, litigation and other disputes, as well as opportunistic acquisitions and the dispositions of non-core business lines. All of these created significant opportunities for our firm, both in the U.S. and globally, and we were glad to help.
At the same time, many clients view us as a business partner as well as a trusted legal advisor, so they also asked for help with managing costs. This included not only alternative fee arrangements but also improving our delivery of services, streamlining processes and helping clients improve their own internal mechanisms for working with their lawyers. So from that standpoint, yes – my leadership priorities definitely expanded, and with lasting effect. Today, we’re still driving continuous improvement programs, looking for Six Sigma applications that can benefit clients and managing our own business operations more aggressively so we have the flexibility necessary to help clients manage costs during this uncertain growth period.
Editor: The changes we saw in the legal market during the height of the financial crisis were fairly dramatic, with a great number of firms taking actions that were largely foreign to them. Did your firm’s strategy change during that time?
Medwick: In response to the financial crisis, several of our partners engaged in a forward-thinking leadership review of anticipated market and legal changes, drawing upon tremendous insights gained from working with the most experienced clients in the marketplace. So, for example, we knew that several key markets – the Americas, Asia, London and Continental Europe – would increase their regulation of financial institutions, and our insight was validated shortly thereafter by Dodd-Frank, BASEL III and other developments.
In response, we saw the need for a joined-up international regulatory team, with a strong group in the Americas. We restructured our teams along those lines and now have a U.S. Regulatory Group, which works with our international colleagues to provide regulatory advice covering the entire globe. Based on the depth of expertise the group possesses, we believe this capability is unique.
That time of change also led us to examine which business areas either might have less need for legal services or might become more competitive and ultimately non-strategic for our clients and, therefore, for us. We decided to reduce our capacity in those areas. This required some difficult but necessary changes affecting partners, associates and business services teams. At the same time, we added to our depth in sectors, growing our areas of focus. In addition, we began to increase the number of back-office functions we moved to India, where Clifford Chance had established a shared-services center and where we had set up our Knowledge Center. The Knowledge Center provides global support work on routine or repetitive matters – very efficiently and cost-effectively – while still adhering to our global standards. We were one of the first firms to do that, and our clients have been grateful for the significant cost savings.
Editor: As you begin to wind down your final term, how would you assess Clifford Chance’s current positioning in the Americas?
Medwick: Our ongoing strategy is to be the best international law firm in the Americas region, while continuing to grow our domestic strengths in the U.S. market by focusing specifically on practice areas in which we can consistently win mandates in the most competitive legal market in the world. This strategy has largely been accomplished in recent years, and my successor will have a strong foundation to build from. Put simply, if a U.S. company is engaged in a cross-border, multijurisdictional matter, they will not find a better firm than Clifford Chance to advise them.
On the transactional front, we have exceptional practices in the Real Estate sector, especially our market-leading REITs and Private Equity Real Estate Funds teams. For example, we are issuer’s counsel in the Empire State Building REIT. In banking, finance and restructuring, we have a tremendous Asset Finance practice with an emphasis in the aircraft finance industry. That group has advised on more than $10 billion in transactions over the past year or so. Our Americas Projects practice is incredibly active in Latin America and Africa and has grown domestically through a strong relationship with the U.S. Department of Energy. In fact, we continue to advise the DOE on its multi-billion dollar renewable energy program.
Our U.S. Corporate practice has climbed to No. 4 in the Mergermarket rankings for the first three quarters of 2012. That team continues to focus on both domestic transactions and international work – with a special emphasis on Latin America. For example, our M&A partners from New York and Sao Paulo recently worked on the merger of LAN-TAM, creating one of the world’s largest airlines. Our Americas Capital Markets practice has a leading reputation in cross-border securities offerings, derivatives and other structured products. And all of our transactional teams work closely with our full-service Tax practice.
On the litigation front, we are largely focused on domestic and multijurisdictional investigations for our largest clients, as well as on regulatory needs and complex commercial litigation. That team is growing again and currently engaged in several high-profile matters that I can’t specifically discuss but that are getting a lot of media attention. Overall, we couldn’t be more excited about what lies ahead for us in this region.
Editor: The Swiss Verein model appears to be increasing in popularity among law firms agreeing to cross-border mergers. What is your view of the model? And what should corporate counsel consider when one of their outside firms merges with another firm?
Medwick: The model that has worked best for us has been the fully integrated, one global firm model. Unlike what I understand about the Verein approach, we have a single profit pool and a single path to partnership – regardless of where attorneys are located and regardless of whether they came up through the ranks or were brought in laterally. Our model allows for consistency of partners across the world, and it ensures that decisions are focused on the best interest of the client, not of a particular office or individual partner.
Frankly, what concerns me regarding the Verein models is they don’t seem to yield a true merging or combination of firms, which leads to concerns about which office, which group or which partner should be performing services on a particular matter. I suspect that has to have an effect on client focus. It’s also unclear to me whether Verein models permit proper management of the issues around consistency of the quality of partners, which global clients continue to tell us is important to them.
Editor: The aftermath of the financial crisis has found in-house legal teams grappling with a spate of new regulations, a growing number of enforcement bodies globally and the effects of expanding extraterritoriality. How have these changes affected your discussions with clients?
Medwick: One of the great things about being a lawyer is that you have an opportunity to learn something new every day, either commercially or as a legal matter. These changes – as well as the unique information we obtain daily from Clifford Chance colleagues on the ground across our global network – have allowed our firm to share visions, to see around corners and to have exciting “what if” discussions with clients as they navigate through the changes engulfing them.
To address these changes, the global Management Committee I am a member of created an industry sector approach that has further deepened our client relationships. Our partners in the U.S. and around the world are focusing on specific industries and offering individual and collective legal/commercial expertise. For example, our teams across various practice groups, such as regulatory, litigation, corporate and finance, are helping clients deal with new regulations as well as the extraterritorial nature of those regulations. These discussions extend beyond the effects of regulatory changes to the potential opportunities those changes may present for a client’s business.
Editor: Clifford Chance was one of the first international firms to open an office in Sao Paulo, with this year marking the 15th anniversary for that office. Do you foresee a time when countries like Brazil, India and China will eventually allow international firms to practice local law?
Medwick: These are interesting times in growth markets, where opportunities are increasingly opening for international firms. This would include, for example, Korea, where this past summer we were one of the first international firms to become licensed and approved to open an office. However, in certain other jurisdictions, in spite of good discussions about allowing international firms to practice, the restrictions and status quo remain. We certainly think there are excellent opportunities for expansion in various emerging markets, and we will continue to work with our clients to see if we can assist in opening those regions to international firms. The benefits to commerce appear clear.
Editor: In view of the importance of compliance with laws that have international reach – for example, FCPA and Hart-Scott-Rodino – are you finding more U.S. multinationals reaching out to your firm for counsel?
Medwick: Yes, they are reaching out to us, but we’re also reaching out to them because we’d rather help eliminate a potential problem than mitigate one. That’s why we brought one of our leading London regulatory partners to New York to help us form the U.S. Regulatory Group, which advises not only on domestic regulations like Dodd-Frank, the Volcker Rule, OFAC and others, but also on AIFM, Basel III and other non-U.S. regulations that U.S. clients need to comply with. Another proactive move was to relocate one of our leading FCPA experts to our Hong Kong office, where she is advising clients across Asia on how to stay compliant with the long arm of the U.S. law. Finally, adding three former federal prosecutors in New York immediately bolstered the white collar aspects of our regulatory offerings, and this team has been traveling extensively to work with clients on high-profile matters.
Editor: Craig, in addition to your current leadership role, you spent your entire career as a corporate lawyer. As you look back, are there lessons you learned along the way that are helpful or applicable to today’s uncertainty in the financial markets?
Medwick: Not only do good lawyers learn new things every day, they often get to apply what they’ve learned from earlier experiences many years later. When I think back to the late 1980s and early 1990s, there was a real estate crisis in the U.S., which affected the savings and loan industry. S&L institutions were being taken over and going out of business, with the Resolution Trust Corporation (RTC) acquiring assets and then selling them into the markets. Many people felt that those assets were distressed and not worth buying, while others saw hidden gems and great opportunities. Likewise, in today’s markets, because of changes in regulations as well as financial and other crises, many assets are viewed as either distressed or non-core, and these are creating potential buying opportunities.
Case in point: we’re working with clients that are acquiring, through real estate private equity mode, single-family homes throughout the United States. An infrastructure has been created to manage these homes, with the possibility of creating vehicles that would be taken public – for example, as REITs – creating an investment product for those interested in cash flow from the operations of the rental market. The real point is that all markets, both good and bad, present opportunities for clients and lawyers who are innovative, open to change and passionate about new possibilities.