As the purchase of legal services by major corporations, particularly on a global basis, becomes increasingly institutionalized, brands become more competitively important.  But the time and investment required to build a brand is beyond the capability of some large firms.  For many of those firms that want to play on a national or international stage, borrowing someone else’s brand may be the most effective solution.

Issues about law firm brands go back to age-old debates about the institutionalization of clients.  With services like accounting or consulting, clients hire the firm.  But in the practice of law, lawyers have special relationships with clients that are unique, legally privileged and difficult to institutionalize.  Law firms argued that their brands aren’t important because clients hire lawyers, not law firms.  Relationship marketing was the hallmark of business development for lawyers, and once a relationship was formed it was difficult for competitors to gain traction with another lawyer’s clients.  Often clients couldn’t even name the firm their lawyer was a member of and if a lawyer moved to a new firm, clients typically followed.

But, over the past five years in the recessionary legal market, general counsels felt the pressure of their boards in demanding greater control over legal costs.  Relationship marketing gave way to depersonalized requests for proposals and qualification panels and, in the most competitive markets, legal services began being acquired by companies’ procurement departments with little input from the corporate legal departments.  At virtually all levels of sophistication, legal work continues to become increasingly price sensitive, and, systematically, price sensitivity leads to commoditization.

The Brand

Here is where brand comes in to play.  For professional services, commoditization means that, once certain hurdles of capability, quality and reliability are met, the determining factor is exclusively price.  And appropriate capability, quality and reliability of a firm’s service is, to the people involved in decision making (or supervising the process), what defines a brand.  That is, when a general counsel is sending out requests for proposals or putting together a list of law firms to consider, he or she needs to be secure that the firms represent safe choices in the eyes of their peers and superiors.  As the saying goes, “Nobody was ever fired for buying IBM.”  At this point, a recognizable brand supersedes relationships in the development of business.

Brands are difficult to build.  A brand is the collection of positive features that differentiates one law firm from another.  While name recognition is a feature of a firm’s brand, it does not in and of itself contribute to creating a brand.  Name recognition can be built quickly through publicity and public relations efforts.  If name recognition is what a firm wants, it can do something exceptionally illegal, unethical or immoral and the world will know the firm’s name pretty quickly.

Developing a positive brand takes time and consistent effort.  It may take literally thousands of client experiences to create a brand, and the less consistent the experience, the longer the process takes.  For this reason, it can be argued that relatively few law firms legitimately have a true brand.  Sure, Cravath’s brand is quality, Wachtell and Skadden are known for big deals and  White & Case and Baker & McKenzie are global, but, after that, its starts getting tougher to identify brands – especially on a national or global scale.  This is especially true for firms in the lower half of the Amlaw 200 and the next 100 or so firms below that.

There is an alternative to building a brand.  When I was living in Ohio, my doctor was part of a two-man family practice that was bought out by the Cleveland Clinic.  At the time, I asked my doctor how the merger was going and he said, “Great.  Yesterday I was a country doctor, today I’m a world class physician.”  He and his partner had successfully attached themselves to one of the strongest health care brands in the world.

Brand Segmentation

In the legal profession, brands usually end up being segmented by areas of differentiation.  The most common are practice, industry and geography.  Examples of practice brands include Wachtell Lipton’s brand for sophisticated, extremely high-end M&A transactions and Shook Hardy & Bacon for product liability litigation, even though both are full service firms.  Industry brands are a little less frequent.  Dow Lohnes is known as a firm that offers a full range of practices to a single industry – communications, and Vinson & Elkins and Baker Botts are known for serving the energy industry.

But the area of brand differentiation that has become the most interesting is geographic, even though it is among the most common.  Most of the world knows Ice Miller as being a dominant Indiana firm even though it has offices in a number of other states, and a big part of Alston & Bird’s brand will always involve Atlanta.  However, because consistency is part of what creates a brand, the incremental geographic growth of many regional firms has, at best, made their brand’s fuzzy, e.g., while Faegre & Benson and Baker & Daniels had reasonably clear brands before their merger, it will take a few years before the legal marketplace has a clear picture of what they are as a combined firm.

Now, all this is especially true of firms seeking national and international brands.  The concept of a national firm having two or more offices in non-contiguous states, and global meaning a firm with an office outside their home country isn’t quite cutting it any more.  At last count there were in excess of 180 U.S. firms with London offices and almost 90 with a rep office in the Peoples Republic of China, yet achieving a respected international brand for almost all of them has proven elusive.

Brand Sharing

So, it comes as no surprise that when faced with an attempt to build a brand, firms opt for borrowing someone else’s.  We call this brand sharing and, just like my doctor did back in Ohio with the Cleveland Clinic, firms are seeing mergers as an attractive strategy for creating a brand.  And, making the process easier, at least at the global level, is the Swiss Verein.  In case you’ve been living in a cave for the last few years, Swiss Vereins are essentially partnerships of partnerships, allowing combined professional service entities in different countries to maintain financial and regulatory independence.  In short, brand sharing.

Case in point, Norton Rose Fulbright.  Why would Fulbright & Jaworski, a U.S. firm with a reasonably strong national brand and a long history of stubborn independence, want to merger with a U.K. firm?  I suspect it is because Norton Rose has assembled a collection of some of the most well thought of firm’s around the world including, in the past couple of years, Ogilvy Renault and Macleoud Dixon in Canada, Deacons in the Pacific Rim and Deneys Reitz in South Africa.  It all adds up to a firm that traces its roots to the 1700’s and has 3,800 lawyers in 50 countries.  On June 1st Fulbright became part of a global brand that would have taken them years to create on their own, maintained their own independent profit pool through the Swiss Verein and even got their name on the door.

There are all sorts of concerns about how such loosely constructed brand sharing efforts will work out in the long run.  But it sure seems to make a lot of business sense and I think we will see a lot more of these in the future.