Globalization and the U.S. Market in Legal Services: Shifting Identities

I. INTRODUCTION The international activities of U.S. lawyers are increasingly important and multiplying as their law firms search for new ways to distinguish themselves from their competitors, and these activities have attracted the attention of the popular, business, and legal press. Law firm mergers spanning national borders are announced in the headlines of national newspapers,(1) and U.S. lawyers are characterized as "egging on" their European clients in their foreign hostile takeover activities.(2) U.S. law firms also are branching out into foreign law specialties by hiring more foreign lawyers for their foreign offices.(3) While once it was sufficient to be a national law firm, today's elite firms stress their internationalism.(4) This article examines the international activities of U.S. law firms and analyzes the impact of these activities on the domestic market in legal services.(5) Internationalization has resulted in the homogenization of the largest U.S. firms, as they increasingly compete for a limited group of clients and lawyers. It also has facilitated competition between Wall Street firms and law firms originally based outside of New York. The latter have reshaped their identities to respond to internationalization and the resulting competition, which has affected their domestic identities as well. This competition also impacts U.S. law firms that are not direct participants in the international market as they vie for position in the domestic market for legal services. The article begins with a brief introduction to the types of services offered by U.S. lawyers to their U.S. and foreign clients in today's international market for legal services. Part III adopts the foreign office as a proxy for internationalization and chronicles the foreign office expansion activities of seventy-two of the largest and most internationally-oriented U.S. firms. Part IV examines the consequences of international expansion, revealing that strategies adopted in international activities affect national competition, just as the need to compete nationally motivates movement into the international realm. Certain strategies are common to international law firms, and these strategies are revealed and examined with regard to their impact on traditional, domestic law firm practice, organization, and management. II. THE INTERNATIONAL ACTIVITIES OF U.S. LAW FIRMS In order to understand the response of U.S. law firms to internationalization, it is useful to have a general understanding of the nature of legal services offered by U.S. lawyers in the international market. Internationalization of the U.S. economy has resulted in an increase in foreign and transnational transactions and disputes for the traditional clients of U.S. law firms. This traditional client base also has diversified and now includes public and private foreign entities and multinational corporations in addition to U.S. concerns.(6) U.S. lawyers have benefited from business generated by foreign investment into the United States. U.S. law firms have been international standard-setters in terms of size, specialization, and comprehensiveness in substantive coverage, foreign expansion, administration, and aggressive marketing of their services.(7) The competitiveness of U.S. law firms derives from various factors, including the role of the United States in the global economy and the dominance of U.S.-based financial institutions and capital markets. International financial transactions generally are regulated either by New York or English law,(8) which has benefited U.S. and U.K. lawyers.(9) In addition to expertise in U.S. law, and particularly New York law, U.S. law firms offer their clients the benefit of their experience with sophisticated corporate and financial transactions; "[i]n the biggest deals, top lawyers now help formulate much of the strategy."(10) Lawyers' deal experience enables them to export complex transactions and adapt them to local legal systems. …